The US Federal Trade Commission announced on Friday. Genshin Developer Cognosphere agreed to a $20 million settlement and several restrictions on how it sells loot boxes and manages children's personal data. According to the FTC, the company “aggressively promoted” its loot boxes to children and misled players about their odds of winning a prize.
Cognosphere also allegedly “deceived children and other users about the true cost of in-game transactions” by requiring virtual currency purchases that involved multiple currency exchanges. Consumer Protection Bureau Director Samuel Levin said players often spent “hundreds of dollars on prizes with little chance of winning.” For years, loot boxes have been likened to a form of legal gambling.
The complaint filed by the Department of Justice also makes the following accusations: Genshin Developers of marketing to children using approaches such as posts on social media channels and in-game banners. The company then allegedly collected personal information in violation of the Children's Online Privacy Protection Regulation. If the settlement is approved, the company would be required to delete data from children under 13 whose parents have not consented to data collection.
Other requirements of the settlement include that Cognosphere must offer the option to purchase loot boxes directly, not just virtual money. It is also prohibited to misrepresent the price, functionality, or winning probability of loot boxes, and the exchange rate of multi-layer virtual currencies must be disclosed.
