Genshin Impact Publisher Hit With $20M FTC Fine for Marketing Loot Boxes to Children

The publisher of the popular mobile game Genshin Impact has agreed to pay a $20 million Federal Trade Commission (FTC) fine, for allegedly deceitfully marketing loot boxes to children and illegally collecting their data.

The FTC’s complaint alleges that the Singapore-based Cognosphere deceived children and other users about the real costs of in-game transactions and the odds of obtaining rare prizes. Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, said that Genshin Impact misled children and teens into “spending hundreds of dollars on prizes they stood little chance of winning.”

“Companies that deploy these dark-pattern tactics will be held accountable if they deceive players, particularly kids and teens, about the true costs of in-game transactions,” he added.

The complaint charged that Cognosphere misled players about the odds of winning, particularly when it came to sought-after “five-star” loot box prizes. The game allegedly also forced players to use a “confusing virtual currency system” that players had to navigate to open these loot boxes and used “unfair” marketing practices. The FTC’s complaint also alleges that the company has mishandled children’s data and personal information, collecting personal information from children under 13 without notifying parents about the information they collect from children, a violation of the FTC’s Children’s Online Privacy Protection Rule (COPPA)

In addition to the fine, children under the age of 16 won’t be allowed to purchase loot boxes in the publisher’s video games without “a parent’s affirmative express consent.” The company will also be banned from misrepresenting loot box odds, prices, and features, and will need to allow users to buy them with money instead of in-game virtual currency. The order will also force the company to delete any personal information previously collected from children under 13 unless their parents give consent.

“While we believe many of the FTC’s allegations are inaccurate, we agreed to this settlement because we value the trust of our community and share a commitment to transparency for our players,” Cognosphere’s US subsidiary HoYoverse said in a statement.

Loot boxes—which are a huge part of how the mobile gaming industry makes money—have been a controversial topic for a long time, any many platforms have attempted to crack down on their misuse. Back in 2019, Google attempted to crack down on loot boxes in Android apps on the Google Play Store, forcing developers to “clearly disclose” the odds of winning. In December 2017, Apple instituted a similar rule for loot boxes, forcing developers on the App Store to disclose the odds of winning loot boxes.

Loot boxes are banned in many EU countries, such as the Netherlands and Belgium, as they are classified as a form of gambling, while countries like Spain and the UK are considering stricter regulations.

About Will McCurdy

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I’m a reporter covering weekend news. Before joining PCMag in 2024, I picked up bylines in BBC News, The Guardian, The Times of London, The Daily Beast, Vice, Slate, Fast Company, The Evening Standard, The i, TechRadar, and Decrypt Media.

I’ve been a PC gamer since you had to install games from multiple CD-ROMs by hand. As a reporter, I’m passionate about the intersection of tech and human lives. I’ve covered everything from crypto scandals to the art world, as well as conspiracy theories, UK politics, and Russia and foreign affairs.

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