The developers of Genshin Impact have agreed to a 20 million dollar settlement with the United States Federal Trade Commission regarding alleged deceptive loot box practices against those under the age of 16. Cognosphere, also known as HoYoverse, was named in the lawsuit as having marketed a "gambling model" to children, as well as collecting their data.

While Genshin Impact continues to be a massive success for HoYoverse with its open-world RPG gameplay, the FTC's settlement, which suggests a purposeful mishandling of children's data and personal information, is deeply disappointing for fans.

According to Forbes, Genshin made 1 billion dollars in its first six months on mobile platforms, and this amount re-occurred every six months for a sustained period. Despite the lawsuit focusing on the exploitation of players, Polygon has reported that the $20 million will be sent to the United States Treasury, and won't be reimbursed to players.

What Does The Genshin Impact Lawsuit Allege

Misleading Loot Boxes And Storing Children's Data

The FTC's complaint against Cognosphere focuses on the alleged misleading of players surrounding their odds of winning rare items in Genshin, with the true costs of these transactions obscured. The lawsuit states that the developers "have misled players about the substantial expenditure likely required" to obtain one of the 5-star prizes, like a character or weapon. The alleged misrepresentation of winning a prize through the Wish system in Genshin is explained in further detail in the lawsuit, which suggests that players are likely to spend a significant amount of money on them:

Defendants [Cognosphere] widely , and prominently feature within Genshin Impact, select “5-star” prizes, which consumers can obtain only by opening loot boxes. The odds of any given loot box containing the d prize are very low, and consumers commonly must purchase dozens of loot boxes, at the cost of hundreds of dollars, to obtain a single 5-star prize. Yet Defendants have misrepresented players’ odds of obtaining rare loot box prizes, and Defendants have misled players about the substantial expenditure likely required to obtain these prizes. - UNITED STATES OF AMERICA v. COGNOSPHERE, LLC, FTC Lawsuit.

In addition to the complaint regarding the loot boxes, the FTC has alleged that Cognosphere has violated the Children's Online Privacy Protection Act (or COPPA) by collecting the personal information of children who play Genshin Impact, without verifiable parental consent. The lawsuit highlights that the developers "proceeded to collect personal information from children before (and without ever) notifying parents and obtaining parental consent," which is a direct violation of the COPPA rule. The personal information of children under the age of 13 was collected, with the lawsuit highlighting Genshin Impact among young people with its "bright and colorful animation."

How Has HoYoverse Responded And What Will Change For Genshin Impact?

Developers Have Promised Change For Fans

A spokesperson for Genshin Impact provided a statement to Polygon in response to the FTC lawsuit. While HoYoverse stressed that the anime-style graphics are popular across all ages, and aren't just limited to children, they stated the belief that "many of the FTC's allegations are inaccurate," but will agree to the settlement to "value the trust of our community." As a direct response to the lawsuit, the developers will "introduce new age-gate and parental consent protections for children and young teens and increase our in-game disclosures around virtual currency and rewards" in the coming months for U.S. players.

The overhaul of Genshin Impact 5.4 update is arriving soon, with much anticipation from fans.

Sources: Forbes, FTC, Polygon,