Epic Games agrees record-breaking $520m fine with FTC, to settle allegations it misled millions of young Fornite players
Epic Games has agreed to record -breaking settlements with the US Federal Trade Commission (FTC) for over a half a billion dollars.
The US regulator announced the settlement on Monday that will see Epic Games pay “a total of $520 million in relief over allegations the company violated the Children’s Online Privacy Protection Act (COPPA) and deployed design tricks, known as dark patterns, to dupe millions of players into making unintentional purchases.”
Essentially the FTC in its compliant had alleged that misled millions of players, including children and teenagers, into making unintended purchases and that it violated a landmark federal children’s privacy law.
The FTC alleged that “even though Fortnite is directed to children, and even when Epic had actual knowledge that Fortnite users were children, Epic failed to comply with the COPPA Rule’s parental notice, consent, review, and deletion requirements. Although Epic has changed its practices over time, those changes have not cured the violations.”
“Children and teens have been bullied, threatened, and harassed within Fortnite, including sexually,” the FTC also stated in its complaint. “Children and teens have also been exposed to dangerous and psychologically traumatizing issues, such as suicide and self-harm, through Fortnite. And the few relevant privacy and parental controls Epic has introduced over time have not meaningfully alleviated these harms or empowered players to avoid them.”
According to the FTC, North Carolina-based Epic Games has made two separate record-breaking settlements.
As part of a proposed federal court order filed by the Department of Justice on behalf of the FTC, Epic will pay a $275 million monetary penalty for violating the COPPA Rule – the largest penalty ever obtained for violating an FTC rule.
In addition, Epic will be required to adopt strong privacy default settings for children and teens, ensuring that voice and text communications are turned off by default.
Secondly, Epic has also agreed to pay $245 million to refund consumers for its dark patterns and billing practices, which is the FTC’s largest refund amount in a gaming case, and its largest administrative order in history.
“As our complaints note, Epic used privacy-invasive default settings and deceptive interfaces that tricked Fortnite users, including teenagers and children,” said FTC Chair Lina M. Khan.
“Protecting the public, and especially children, from online privacy invasions and dark patterns is a top priority for the Commission, and these enforcement actions make clear to businesses that the FTC is cracking down on these unlawful practices,” said Khan.
“The Justice Department takes very seriously its mission to protect consumers’ data privacy rights,” said Associate Attorney General Vanita Gupta. “This proposed order sends a message to all online providers that collecting children’s personal information without parental consent will not be tolerated.”
“Epic put children and teens at risk through its lax privacy practices, and cost consumers millions in illegal charges through its use of dark patterns,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Under the proposed orders announced today, the company will be required to change its default settings, return millions to consumers, and pay a record-breaking penalty for its privacy abuses.”
Epic Games response
Epic Games addressed the twin FTC settlements in a blog post, in which it said the agreement reflects an evolution in how US laws are applied to the video gaming industry.
“No developer creates a game with the intention of ending up here,” said Epic Games. “The video game industry is a place of fast-moving innovation, where player expectations are high and new ideas are paramount. Statutes written decades ago don’t specify how gaming ecosystems should operate.”
“The laws have not changed, but their application has evolved and long-standing industry practices are no longer enough,” Epic Games added. “We accepted this agreement because we want Epic to be at the forefront of consumer protection and provide the best experience for our players.”
“Over the past few years, we’ve been making changes to ensure our ecosystem meets the expectations of our players and regulators, which we hope will be a helpful guide for others in our industry,” it added.