Genshin Impact Distributor Agrees to Pay $20 Million Settlement

Cognosphere, the distributor behind the popular game Genshin Impact, has agreed to pay $20 million to settle charges brought against it by the U.S. Federal Trade Commission (FTC). This settlement resolves allegations of violating online privacy laws and deceptive marketing practices.


FTC Complaint Details

On January 17, 2025, the U.S. Federal Trade Commission filed a complaint in the United States District Court for the Central District of California. The FTC accused Cognosphere of violating the Children’s Online Privacy Protection Act (COPPA) and misleading consumers about the cost of in-game transactions.


Alleged Violations of COPPA

The FTC’s complaint claims that Cognosphere marketed Genshin Impact towards children under 13 years of age. This violated COPPA, which mandates that companies must obtain parental consent before collecting personal information from children under 13.


Deceptive Marketing of Loot Boxes and Costs

Additionally, the FTC alleged that Genshin Impact deceived players regarding the odds of winning in-game prizes from loot boxes. Players were misled about how much money they might need to spend to win specific rewards. The complaint also criticized the unclear purchasing process for in-game currency, which the FTC argued misled consumers about the cost involved.


Settlement Terms and Changes

Under the terms of the proposed settlement, Cognosphere is required to make significant changes to its practices:

  • Age-Gate and Parental Consent: The company must implement new protections to prevent children under 16 from purchasing loot boxes without parental consent.
  • Clearer Disclosures: Cognosphere is also required to correct the misrepresentation of loot box odds, prices, and features in the game, providing clearer information to players.

Response from Cognosphere

Cognosphere responded to the FTC’s claims, stating that while it believes many of the allegations are inaccurate, it agreed to the settlement to maintain the trust of its community. The company committed to introducing new age-gate and parental consent protections for younger players and to improve in-game disclosures about virtual currency and rewards for U.S. players.


FTC’s Statement

Samuel Levine, the Director of the FTC’s Bureau of Consumer Protection, emphasized the importance of holding companies accountable for using deceptive tactics. He stated, “Genshin Impact deceived children, teens, and other players into spending hundreds of dollars on prizes they stood little chance of winning.”


Background of Cognosphere

Cognosphere is a subsidiary of the Chinese video game developer MiHoYo, which is also the publisher of Genshin Impact. In the U.S., it operates under the name HoYoverse.


Key Points

  • Cognosphere has agreed to pay $20 million to settle charges by the FTC.
  • The FTC alleges violations of the Children’s Online Privacy Protection Act (COPPA) and deceptive marketing practices related to in-game transactions.
  • The company marketed Genshin Impact to children under 13 without parental consent and misrepresented loot box odds and costs.
  • The settlement mandates changes, including age-gating loot box purchases and clearer disclosures of in-game costs.
  • Cognosphere maintains that the allegations are inaccurate but has agreed to the settlement for transparency and community trust.
  • The FTC warns against deceptive practices that target children and teens in the gaming industry.

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