FTC Fines Cognosphere $20M for Privacy Violations

The Federal Trade Commission (FTC) has imposed a $20 million fine on Cognosphere, the developer of Genshin Impact, over allegations of deceptive marketing and illegal data collection involving loot boxes. The FTC claims that Cognosphere misled players, particularly children, about the real costs and odds of winning prizes in loot boxes, employing tactics likened to gambling. The settlement requires Cognosphere to prevent children under 16 from purchasing loot boxes without parental consent, mandates accurate disclosure of loot box odds and costs, and necessitates the deletion of personal data collected from children under 13 without parental consent. Additionally, Cognosphere must allow direct loot box purchases with real money, rather than through virtual currencies. This case signifies increased regulatory scrutiny on monetization practices in the gaming industry. Cognosphere has agreed to these terms while expressing disagreement with some FTC allegations, emphasizing their commitment to transparency and player trust.