FTC Reaches Record Billing of $520M with Epic Games

Epic Games, makers of the hit Fortnite game, will pay the Federal Trade Commission a record $520 million to settle claims it violated children’s privacy.

The North Carolina-based company’s popular game has tricked millions of players into making unintentional purchases, the FTC said in a statement Monday.

As a result, Epic has agreed to pay $275 million for violating the Children’s Online Privacy Protection Act — the largest penalty ever imposed for violating an FTC rule.

Epic will also pay $245 million in consumer refunds, which the regulator said was the largest refund in a gaming case. As part of the agreement, Epic will set new default privacy settings for children and young people that will ensure that voice and text communications are turned off by default.

“Epic used privacy-invading default settings and deceptive interfaces that tricked Fortnite users, including teens and children,” FTC Chair Lina M. Khan said in a statement. “Protecting the public, and children in particular, from online privacy intrusions and dark patterns is a top priority for the Commission, and these enforcement actions give businesses a clear signal that the FTC is taking action to stop these illegal practices.”

Epic Games said in a statement that it accepted the deal so it could “be at the forefront of consumer protection and provide the best experience for our players.”

In its release, Epic pointed to outdated laws governing gaming, saying the video game industry is fast-moving and expectations are high.

“This proposed order sends a message to all online providers that collecting personal information from children without parental consent will not be tolerated,” Associate Atty said. General Vanita Gupta in a statement.

The FTC said Epic broke its rules by collecting personal information from children under the age of 13 who played Fortnite without notifying their parents. It also broke rules by enabling real-time voice and text chat communication for kids and teens by default. The FTC said children and youth have been bullied, threatened, harassed and subjected to traumatizing issues such as suicide during Fortnite.

The regulator said Epic employees warned about the default settings as early as 2017. Although Epic added a button that allows users to turn off voice chat, it’s difficult to find, the FTC said.

Epic said Monday that it has already added additional default high privacy settings for all players under 18, including changes like profiles being automatically hidden, and players under 16 also have a mature language filter enabled by default.

In a separate complaint, the FTC claimed that Epic Games used so-called dark patterns to entice users to buy.

“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 simply attempting to preview an item,” the regulator said . “These tactics resulted in hundreds of millions of dollars in unauthorized consumer charges.”

The FTC said Epic had received more than 1 million user complaints, and there were concerns from employees that a large number of users were being unfairly billed.

“All game developers should reconsider their moves to simplify cash flows in favor of practices that offer the greatest possible clarity to gamers when making purchasing decisions,” Epic said in its statement.