UPDATE: This story has been updated to include a response from the Federal Trade Commission (FTC).
Epic Games, developer of the popular video game “Fortnite,” reached a $520 million settlement with the U.S. Federal Trade Commission (FTC) for allegations that it violated children’s privacy rights and manipulated users into making unauthorized purchases, according to the FTC Monday.
The settlement consists of two separate payments, $275 million for violating the Children’s Online Privacy Protection Act (COPPA) and $245 million to refund customers that Epic took advantage of via manipulative billing practices, the FTC reported Monday. Epic is also required to disable chat features in its games for users under 13, establish new privacy rules and delete all previously-collected personal information belonging to children. (RELATED: Biden Regulator Sues Microsoft)
“As our complaints note, Epic used privacy-invasive default settings and deceptive interfaces that tricked Fortnite users, including teenagers and children,” FTC Chair Lina M. Khan said in an FTC press release. “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.”
While Epic admitted no fault, it announced the creation of so-called “Cabined Accounts” for young players that turned off online games’ chat and purchasing features until parental consent is given, and re-iterated that “high privacy” settings are already on by default for users under the age of 18, according to a Monday press release.
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
The FTC alleged that Epic knew that children comprised a significant portion of Fortnite’s player base, and that it intentionally made it difficult for parents to disable the collection of their children’s personal data, while simultaneously making it simple for children to rack up large credit card purchases without parent’s consent. In addition, Epic took advantage of so-called “dark patterns” such as making “counterintuitive, inconsistent, and confusing button configurations” for the game’s menus, which made it easy for users to make a purchase while attempting to preview in-game items, or while simply trying to load the game, the FTC alleged.
Epic argued that Fortnite is targeted to an “older teen and college-aged audience,” but developers need to adapt their games to the reality that younger children will inevitably find ways to access games targeting older users, Epic said in a Monday press release. It also noted that COPPA protections, and privacy laws concerning children, were generally expanding to include teenagers.
“Statutes written decades ago don’t specify how gaming ecosystems should operate,” said Epic in a press release. “The laws have not changed, but their application has evolved and long-standing industry practices are no longer enough.”
The COPPA settlement is the largest penalty in history for violating FTC regulations, while the second settlement is the largest administrative order — a type of regulatory declaration — that has ever been imposed, according to the FTC. Epic was valued at roughly $32 billion as of April, according to the Wall Street Journal.
In response to Epic’s claim that the statutes governing gaming companies are outdated, an FTC spokesperson told the Daily Caller News Foundation that the complaint clearly laid out how the rules applied in Epic’s case.
“Regardless of whether the FTC issues any new regulations, the complaints we announced today make clear how the FTC Act and the COPPA Rule applied to Epic’s practices,” the FTC spokesperson said. “Gaming companies and other businesses should take note of both complaints.”
Epic Games did not immediately respond to a Daily Caller News Foundation request for comment.
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