Today, the United States Federal Trade Commission has published a summary of their case against ‘Genshin Impact’ developer Cognosphere, issuing a $20M USD monetary penalty against “Cognosphere Pte. Ltd” and “Cognosphere LLC”. Alongside civil penalties, the companies are prohibited from selling loot boxes to children under the age of 16 without “affirmative express consent” of their parents, along with these other injunctions:
- Prohibited from selling loot boxes using virtual currency without providing an option for consumers to purchase them directly with real money;
- Prohibited from misrepresenting loot box odds, prices and features;
- Required to disclose loot box odds and exchange rates for multi-tiered virtual currency;
- Required to delete any personal information previously collected from children under 13 unless they obtain parental consent to retain such data; and
- Required to comply with COPPA including its notice and consent requirements.
Notably in this list is the first bullet point, which dictates that any chance-based reward mechanic will require an up-front real-world money option for purchase instead of requiring that players first purchase a “fake” currency with real money to complete the transaction. Games with “gacha mechanics” like Genshin Impact, FC25, and Roblox typically make a significant portion of their revenue by selling “loot boxes” (think character obtainment) through their virtual storefronts and can only be purchased by using the game’s virtual currency—many times, these are not 1:1 conversions between a dollar amount and the virtual currency and that extra step is harmful for consumers.
Another example is how 1600 Microsoft Points equalled $20 USD—though that currency has been gone long enough that the younger audience likely isn’t aware of it (that very idea causes me a bit of pain (I’m getting old)).
Check out the full case summary and filings over on the FTC’s website for more details. Genshin Impact is a free-to-play open-world 3D adventure game that is available on PC, PlayStation, Xbox Series consoles, and mobile platforms.
