The developer of popular gacha-based open world RPG "Genshin Impact" is being ordered by the Federal Trade Commission (FTC) to pay $20 million in settlement.
The charges are based on several restrictions on how the company sells its loot boxes as well as how it manages children's personal data.
The FTC noted that the development was due to how the company "actively marketed" its loot boxes and supposedly misled players about their odds of winning prizes.
Genshin Impact Dev To Pay $20 Million
Allegedly, Cognosphere also "deceived children and other users about the real costs of in-game transactions." This was by allegedly requiring them to purchase in-game currency that involved multiple virtual money exchanges.
Bureau of Consumer Protection Director Samuel Levine said that players often had to spend hundreds of dollars on various prizes that had very little chances of being acquired.
Loot boxes have been considered a form of legal gambling for years now, according to The Verge.
The Department of Justice (DOJ) was the one that filed the complaint against Cognosphere and also accuses the video game developer of marketing to kids using various approaches. These are posts on social media channels as well as in-game banners.
The company then supposedly collected their personal information, which is in violation of the Children's Online Privacy Protection Rule.
After the $20 million settlement is approved, Cognosphere will be required to delete any data for children younger than 13 years old whose parents have not consented to their data being collected.
Levine said that companies that use these "dark-pattern tactics" will be held accountable if they continue to deceive players about the true costs of in-game transactions, Forbes said.
Handling of Loot Boxes and Children's Personal Data
The result of the settlement will limit "Genshin Impact" and not allow children younger than 16 years old to spend real money on loot boxes without the consent of their parents.
Another part of the settlement is that loot boxes that players can buy with virtual currency must also be buyable with clearly labeled real money values. Additionally, the developer has disclosed to players the odds and exchange rate of loot boxes and "multi-tiered" currency.
A spokesperson for "Genshin Impact" said that animation-style games and shows have been well-received by global audiences and players of various ages. They added that this title is a popular free-to-play game that was designed for older teens and adults.
The spokesperson added that while many of the FTC's allegations were inaccurate, they have agreed to pay the settlement because they value the trust of their community.
Additionally, they supposedly share a commitment to transparency for their players, according to Polygon.
