Epic Games, developer of the popular online video game Fortnite, has agreed to pay $520 million in penalties and refunds to settle allegations surrounding alleged violations of children’s privacy and the use of design tricks to dupe millions of players into making unintentional purchases.
The Federal Trade Commission (FTC) and the Department of Justice (DOJ) announced the fines, the largest the FTC has ever imposed for a rule that it enforces, in separate releases on Dec. 19.
According to U.S. federal regulators Epic Games, North Carolina-headquartered Epic Games, founded by video game programmer Tim Sweeney and Canadian entrepreneur Mark Rein, violated the Children’s Online Privacy Protection Act (COPPA), the Children’s Online Privacy Protection Rule (COPPA Rule), and the Federal Trade Commission Act.
Specifically, authorities argued that the game developer collected personal data from children under the age of 13, including their names, email addresses, and other identifiers used to keep track of players’ progress, as well as their purchase history, settings, and friends lists, without first obtaining parents’ verifiable consent or informing them that they were doing so.
Prosecutors also claimed that parents who requested their children’s personal information be deleted were made to “jump through unreasonable hoops” in order to have the information taken down and that Epic Games sometimes did not follow through with the requests.
Prosecutors further allege that Epic Games’ default settings were unfair under Section 5 of the FTC Act, as they publicly broadcast child and teen Fortnite players’ display names, and put children and teens in contact with adult Fortnite players via its real-time voice and text chat function.
The developer’s default settings, used in matching children and teens with strangers to play Fortnite together, also harmed children, according to prosecutors, and led to children and teenagers being bullied, threatened, harassed, and exposed to “dangerous and psychologically traumatizing issues such as suicide” while on Fortnite.
Unintended Purchases
Fortnite, which has over 400 million users worldwide, is generally free for users to download. However, players are charged for in-game items such as dance moves or costumes.
Officials claimed that players of all ages were tricked into making unintended in-game purchases by Fortnite’s “counterintuitive, inconsistent, and confusing” button configuration, which the FTC alleged led players to make purchases based on the press of a single button.
This is known as “dark patterns.”
“For example, players could be charged while attempting to wake the game from sleep mode, while the game was in a loading screen, or by pressing an adjacent button while attempting simply to preview an item. These tactics led to hundreds of millions of dollars in unauthorized charges for consumers,” the FTC said.
Of the multi-billion dollar settlement, Epic Games will pay a $275 million penalty for violating children’s privacy law and has agreed to change its default privacy settings and policies as well as its chat and text functions, which will now be prohibited for children and teens to use unless parents confirm their consent.
Approximately $245 million will go to refunds for allegedly tricking users into making unwanted purchases and Epic Games will be banned from charging players through the use of so-called “dark patterns” without first obtaining their affirmative consent.
The game maker will also be barred from blocking consumers from accessing their accounts to dispute the unauthorized charges.
“Epic used privacy-invasive default settings that harmed young Fortnite players,” said FTC Chair Lina M. Khan in a statement on Monday. “Protecting the public, and especially children and teens, from online privacy invasions is a top priority for the Commission, and this enforcement action makes clear to businesses that the FTC is cracking down on these unlawful practices.”
‘No Intention of Ending Up Here’
As part of the settlement, Epic neither confirmed nor denied the allegations.
In a statement posted on its official website on Monday, Epic confirmed the settlement while noting that “no developer creates a game with the intention of ending up here.”
“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 statement read. “The laws have not changed, but their application has evolved and long-standing industry practices are no longer enough. We accepted this agreement because we want Epic to be at the forefront of consumer protection and provide the best experience for our players.”
Epic was most recently valued at $32 billion, The Wall Street Journal reports, with Fortnite making over $9 billion in 2018 and 2019 combined, according to gaming site IGN.
Katabella Roberts is a news writer for The Epoch Times, focusing primarily on the United States, world, and business news.
