Penalty Amount
$20,000,000
The FTC settled with Cognosphere LLC, developer of Genshin Impact, for violating COPPA by collecting personal information from children without parental consent and for deceptive practices regarding in-game loot box purchases. The company will pay $20 million in penalties and is banned from selling loot boxes to children under 16 without verifiable parental consent.
Cognosphere LLC must pay $20 million in civil penalties, is permanently enjoined from selling loot boxes to children under 16 without verifiable parental consent, and must implement a comprehensive privacy program to comply with COPPA.
In-house legal teams should review all customer-facing agreements (Terms of Service, End User License Agreements), vendor contracts involving data processing or analytics for child-directed services, and any data processing addendums. Specific clauses to scrutinize include those governing consent mechanisms (especially for users under 13 and 13-16), data collection from minors, in-game purchase and loot box mechanics, disclosure of odds for virtual items, and age verification procedures. Changes will likely be needed to implement robust, verifiable parental consent flows, restrict or prohibit loot box purchases for users under 16, provide clear and conspicuous odds disclosures, and establish enforceable age-gating and transaction limit systems to comply with COPPA and prevent deceptive practices.
Entity
COGNOSPHERE LLC
Also known as: Cognosphere
Industry
GamingOfficial Press Release
https://www.ftc.gov/legal-library/browse/cases-proceedings/222-3152-cognosphere-llc-us-v
cognosphere complaint
https://www.ftc.gov/system/files/ftc_gov/pdf/cognosphere_complaint.pdf
cognosphere stiporder
https://www.ftc.gov/system/files/ftc_gov/pdf/cognosphere_stiporder.pdf
Cognosphere Attachment3 2
https://www.ftc.gov/system/files/ftc_gov/pdf/Cognosphere-Attachment3-2.pdf
Cognosphere Attachment3 3
https://www.ftc.gov/system/files/ftc_gov/pdf/Cognosphere-Attachment3-3.pdf
Cognosphere Attachment3 4
https://www.ftc.gov/system/files/ftc_gov/pdf/Cognosphere-Attachment3-4.pdf
cognospherea
https://www.ftc.gov/system/files/ftc_gov/pdf/cognospherea.pdf
Federal Trade Commission Enforcement Page
https://www.ftc.gov/enforcement
"COGNOSPHERE LLC"
"$20 million"
"Children's Online Privacy Protection Act (COPPA)"
"violated a children’s privacy law and deceived children and other users about the real costs of in-game transactions and odds of obtaining rare prizes."
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$1.9M
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