WASHINGTON, D.C. — The Federal Trade Commission (FTC) has reached a $20 million settlement with Cognosphere Pte. Ltd., the developer behind the popular game Genshin Impact, over allegations that the company unfairly marketed loot boxes to children and misled players about their true costs and odds of winning high-value prizes. The settlement, which also addresses violations of children’s privacy laws, establishes new limits on in-game purchases and advertising practices.
According to the FTC’s complaint, Cognosphere, operating under its subsidiary Cognosphere LLC and the brand HoYoverse, targeted children and teens with deceptive practices that obscured the real price of loot boxes and exaggerated the likelihood of receiving rare five-star rewards. These loot boxes, integral to Genshin Impact’s gameplay, required players to spend real money on virtual currency—a system that the FTC said misled players into investing hundreds or even thousands of dollars to win desirable prizes.
The allegations further revealed that Cognosphere violated the Children’s Online Privacy Protection Rule (COPPA) by collecting personal information from children under 13 without parental consent. The company allegedly shared this data with third-party analytics and advertising firms to further its promotional campaigns.
“Genshin Impact deceived children, teens, and other players into spending hundreds of dollars on prizes they stood little chance of winning,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “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.”
The FTC complaint also highlighted Genshin Impact’s widespread use of anime-style graphics and childlike characters to appeal to children, as well as its heavy investment in hiring social media influencers popular with young audiences to promote high-stakes loot box gameplay. Promotional campaigns often misrepresented the odds of winning rare prizes while creating urgency through limited-time advertising within the game.
Under the settlement, Cognosphere will pay a $20 million penalty, cease specific marketing practices, and implement significant reforms. These include prohibiting children under 16 from making in-game purchases without parental consent, banning the use of virtual currency for loot boxes without an option to pay in real money, and mandating full disclosure of loot box odds and exchange rates for virtual currency. The company must also delete any personal information collected from children under 13 unless parental consent is secured and comply with all COPPA requirements going forward.
This settlement underscores the FTC’s ongoing commitment to protecting children and consumers from deceptive practices within the gaming industry. By addressing misleading promotions and privacy violations, the decision aims to set new standards for transparency and accountability in how digital products, particularly those targeting minors, are marketed and monetized.
The order awaits final approval by a federal judge before taking effect.
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