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FTC Fines Cognosphere $20M for COPPA and Loot Box Deception

COGNOSPHERE LLCJanuary 17, 2025Federal Trade Commission

Penalty Amount

$20,000,000

Summary

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.

Remedy

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.

Monetary PenaltyInjunctionConsent DecreeBan

Contract Impact

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.

Contract Search Terms

verifiable parental consentCOPPA compliance clauseloot box purchase restrictionage verification systemin-game transaction limitsodds disclosure for virtual itemsdata collection from children under 13children's privacy addendummicrotransaction consentparental control mechanisms

Laws Cited

COPPA

Violation Types

Entity Details

Entity

COGNOSPHERE LLC

Also known as: Cognosphere

Industry

Gaming

Official Sources

Source Evidence

Entity Name
"COGNOSPHERE LLC"
Fine Amount
"$20 million"
Laws Cited
"Children's Online Privacy Protection Act (COPPA)"
Violation Types
"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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