Fortnite maker makes record $520 million deal with U.S. commission

Epic Games, makers of the hit video game “Fortnite,” have agreed to pay a total of $520 million to settle US government allegations that it misled millions of gamers, including children and teens, to make unintentional purchases and that violated a landmark federal child privacy law.

As part of the settlement, Epic will pay $275 million to the US government to resolve allegations that it violates the Children’s Online Privacy Protection Act (COPPA) by collecting personal information from children under the age of 13 without first receiving verifiable consent from their parents. . It’s the biggest fine the Federal Trade Commission (FTC) has ever imposed under a rule it enforces, the agency said on Monday.

In a second, separate settlement, Epic will pay $245 million in reimbursements to consumers who were allegedly harmed by user interface design choices the FTC alleged were misleading. That settlement is the largest administrative order in the commission’s history, the FTC added.

In a blog post addressing the twin deals, Epic said the deal reflects an evolution in how US law is applied to the video game industry.

“No developer builds a game with the intention of ending up here,” Epic said in the blog post. “We accept this agreement because we want Epic to be at the forefront of consumer protection and provide the best experience for our players.”

FTC Chair Lina Khan said the settlement reflects the agency’s increased focus on privacy and so-called “dark patterns,” a term used to describe design elements intended to drive users to a company’s preferred outcome.

“Protecting the public, and especially children, from online privacy invasions and dark patterns is a priority for the Commission, and these enforcement actions make it clear to companies that the FTC is cracking down on these illegal practices,” Khan said in a statement. .

The agency’s complaint and proposed settlement regarding children’s privacy was filed in the US District Court for the Eastern District of North Carolina. In addition to the alleged illegal collection of children’s data, the FTC also alleged that Epic’s default settings for matchmaking and in-game communications exposed children to bullying and harassment.

Allegations of Epic’s misleading design choices were filed as an administrative complaint with the FTC. The complaint states that Epic made it extremely easy for children to purchase in-game items with a single click or button press without parental approval, resulting in over a million parental complaints to the company about unwanted charges.

The FTC further alleged that Epic made it difficult to cancel in-game item purchases by hiding the option at the bottom of the screen and requiring consumers to press and hold a button on their controllers to complete the cancellation. Those design choices were reportedly implemented after research showed that when the unsubscribe button was most prominently displayed, accidental charges were the “number one reason” users clicked the button, the commission said.

Epic’s settlement with the FTC, which is not yet final, prohibits the company from using unclear standards or charging consumers without their consent, and also prohibits the company from blocking players from their accounts in response to user chargeback requests. with credit card companies who dispute charges. The decision will last for 20 years from the date of its adoption.

In its blog post, Epic said it has agreed with the FTC to implement a feature that explicitly asks Fortnite users whether to save their payment information for future use. The feature is currently active, he added. The company also recently released a more limited version of “Fortnite” for younger gamers, which allows them to access some features while awaiting parental consent, but which restricts chatting and purchases.

The FTC said that, as part of the privacy settlement, Epic can no longer allow text and voice chat for teenage Fortnite players or those under 13.

The company must also establish a comprehensive privacy program and delete data allegedly collected in violation of COPPA.

“We share the underlying principles of fairness, transparency, and privacy that the FTC enforces, and the practices mentioned in the FTC complaints are not how Fortnite operates,” Epic wrote. “We will continue to be open about what players can expect when making purchases, ensure cancellations and refunds are simple, and create safeguards that help keep our ecosystem safe and fun for audiences of all ages.”