Take-Two Interactive Software Inc., publishers of the popular video game "Grand Theft Auto: San Andreas," agreed to settle Federal Trade Commission charges for failing to disclose that animated sex scenes were hidden on the discs.
The deal requires Take-Two and Rockstar Games Inc., the developer of the game, to properly notify consumers of racy content on future games and not to misrepresent rating or content descriptions.
The companies face fines of up to $11,000 per violation if they violate the order, once it becomes final.
When the lurid content was first discovered, the two companies initially said it was the work of third-party video game modifiers.
They later acknowledged it was their work after The Associated Press tracked down a Dutch programmer who developed software to unlock the sex scenes. The companies said the content was never meant to be accessed by consumers during normal game play.
"Parents have the right to rely on the accuracy of the entertainment rating system," said Lydia Parnes, of the FTC's Bureau of Consumer Protection. "We allege that Take-Two and Rockstar's actions undermined the industry's own rating system and deceived consumers."
The Commission voted 5-0 to accept the agreement, which was announced Thursday. It is subject to a 30-day public comment period before becoming final.
Take-Two did not immediately return calls seeking comment and Rockstar Games did not immediately reply to e-mails from The Associated Press.
The game was originally rated "M" (Mature) for its depiction of blood, violence and sex themes. The Entertainment Software Rating Board changed the rating to "AO" (Adults Only), and major retailers nationwide hastily removed the title from their shelves, following the game makers' admissions.
Take-Two claimed it incurred $24.5 million in costs associated with returns of the game, which generated $100 million in sales within its first month of release in October 2004.
Published rating-board rules at the time the game was released did not require the disclosure of the sex content in question, said Keith Fentonmiller, an attorney for the FTC who worked on the case.
"But it's our belief that there was a duty to consumers to let them know about important content that was on the game," Fentonmiller said Thursday.
After the hidden sex scenes made headlines, the political fallout hurt the whole gaming industry.
Sen. Hillary Rodham Clinton, D-New York, applauded the ratings change forced on the game, but said she was disturbed the steamy sex content was on store shelves in the first place.
In January, the Los Angeles city attorney's office sued the makers of "Grand Theft Auto: San Andreas" over the hidden sex scenes, seeking civil penalties from Take-Two. That case remains active, the city attorney's office confirmed Thursday.