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Epic has had tremendous success with Fortnite. Between 2018 and 2019, the game made $9 billion in profit, while $5.1 billion was made in 2020's total sales.
However, to resolve claims that it violated the Children's Online Privacy Protection Act (COPPA) and "tricked millions of gamers into making inadvertent transactions," Epic Games, the producer of Fortnite, will pay $520 million, according to the Federal Trade Commission. Two different settlements, each of which broke FTC records, are mentioned by the commission.
According to a proposed federal court judgment, Epic would pay $275 million for allegedly breaking the COPPA rule. According to the agency, that is the highest fine it has ever gotten for breaking a rule.
Additionally, Epic will return $245 million to customers for its invoicing practices and the usage of "dark patterns." According to the FTC, that is both its largest administrative order to date and the highest reimbursement in a gaming-related dispute. Following a 30-day window for public comments, it will decide whether to put the consent order into effect.
FTC chair Lina M. Khan said in a statement that,
"as our complaints note, Epic used privacy-invasive default settings and misleading interfaces that deceived Fortnite users, including teenagers and children."
"Protecting the public, and especially minors, from online privacy intrusions and dark patterns is a key concern for the Commission, and these enforcement actions make clear to businesses that the FTC is cracking down on these illegal practices," the commission stated.
The FTC alleged that Epic broke the COPPA law by gathering personal information from Fortnite gamers under the age of 13 without their knowledge or permission. According to the FTC's lawsuit, parents had to "jump through unusual hoops" to get Epic to delete personal information on their children, and even then, the firm didn't always abide by their requests.
Additionally, the government charged Epic with using "unfair tactics" and endangering kids and teenagers by making voice and text chat available by default. The FTC stated that while playing Fortnite, "Children and Teens have been Bullied, Threatened, Harassed and exposed to Dangerous and Psychologically Traumatizing Issues such as Suicide."
The FTC claims that a groundbreaking clause in the COPPA settlement requires Epic to have stricter default privacy settings for children and teenagers, including making sure that voice and text chat are off by default. Unless a player declares they are 13 or older or the firm obtains parental consent to keep the information, the company must also destroy any personal information it has gathered about Fortnite users.
Epic introduced "cabined accounts" earlier this month for young Fortnite, Fall Guy, and Rocket League gamers. It said at the time that these accounts offered children a secure method to enjoy its games. Users with cabined accounts are unable to utilize voice chat or purchase in-game stuff without their parents' permission.
In the second complaint, Epic was charged with "allowing youngsters to rack up unlawful payments without any parental participation" and "using dark patterns to mislead gamers into making undesirable purchases." The FTC asserted that users might be charged if they restart Fortnite while it is in sleep mode, while game is loaded, or if they unintentionally touch a button adjacent to an item preview choice. According to the agency, consumers paid "hundreds of millions of dollars in unlawful charges" as a result of these design choices.
According to the FTC, until 2018, kids could purchase V-Bucks, the virtual currency used in Fortnite, without their parents' permission. According to the agency, "several parents claimed that before they discovered Epic had charged their credit card without their authorization, their children had built up hundreds of dollars in charges." Similar factors have led the FTC to target companies like Amazon, Google, and Apple in the past.
Additionally, consumers who raised concerns about fraudulent charges with their credit card issuers allegedly had their accounts suspended by Epic. According to the FTC, Epic disregarded more than a million consumer complaints and employee worries about unfair prices.
The proposed consent order aims to stop Epic from exploiting dark patterns to charge consumers or otherwise charging them without receiving their express authorization, in addition to the $245 million it will pay to reimburse refunds. Additionally, Epic will promise to selectively disable accounts it suspects of true fraud, rather than imposing blanket bans on all accounts that do chargebacks. When it has further information to provide regarding the refund scheme, the FTC will email consumers who bought Fortnite in-game items.
Epic Games creator of the video game Fortnite, to pay a total of $520 million over FTC allegations Epic violated the Children’s Online Privacy Protection Act and deployed dark patterns to dupe millions of players into making unintentional purchases: https://t.co/yHaQx8VXlu
— FTC (@FTC) December 19, 2022
Among other things, Epic stated in a long statement that it had "restored thousands of accounts that were banned owing to reported chargebacks under our previous approach." Users will now have the option to prevent the default saving of payment information.
This will make the checkout process more difficult and potentially prevent inadvertent purchases. According to the firm, "We accepted this agreement because we want Epic to be at the forefront of consumer protection and give our gamers the greatest experience possible."
The FTC emphasizes that Epic Games' legal issues with Fortnite, which has more than 400 million users, are not over. A judge granted permission earlier this month for a Quebec class action lawsuit alleging that the game is addicting and that one child spent more than $6,000 CAD on skins as a result.
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