Epic Games settles with FTC, to pay $275m fine for child data collection and refund $245m for deceptive practices to customers
US federal regulators have announced that Epic Games, the video game company, will pay $520 million in penalties and refunds to resolve complaints related to children’s privacy and tactics that deceived players into making purchases.
The Federal Trade Commission (FTC) has obtained record-breaking settlements from Epic Games, the creator of the popular game Fortnite, for two cases.
According to FTC chair Lina Khan, Epic Games employed default settings that invaded privacy and misleading interfaces which deceived Fortnite users, including minors.
Epic Games has agreed to pay a fine of $275 million for obtaining personal information of Fortnite players under the age of 13 without parental notification or consent, making it the largest penalty ever imposed for a breach of FTC rules.
In addition to the fine, Epic Games will reimburse $245 million to customers who were affected by “dark patterns” and billing practices. “Dark patterns” refer to misleading online strategies used to push users into performing actions they did not intend to do.
According to the FTC, the confusing and inconsistent button configuration in Fortnite resulted in players unintentionally incurring charges. The FTC gave examples such as players being charged when trying to wake the game from sleep mode, during loading screens, or when attempting to preview an item by pressing a nearby button.
According to Epic Games, the payment is being made to address issues with the “past design” of the Fortnite item shop and refund systems. The FTC will have discretion in distributing the money to Epic customers. The tactics used by the company resulted in hundreds of millions of dollars in unauthorized charges for consumers, according to the FTC.
The company stated that the statutes were written many years ago and do not outline how gaming ecosystems should function. It added that although the laws have not been altered, their implementation has evolved, and conventional industry practices are no longer sufficient.
