The United States Federal Trade Commission (FTC) imposed two fines with a combined value of $520 million to Epic Games, the company behind the popular videogame Fortnite, in what the agency deemed as “record-breaking settlements” for cases involving the violation of children’s privacy and the use of tricky billing practices.
In a press release published yesterday, the FTC announced that a $275 million fine was imposed for violating the country’s Children’s Online Privacy Protection Act (COPPA), which was created to protect underage individuals from having their data collected by companies for commercial purposes without their parent’s consent.
Even though Fortnite is a teen-rated game for users older than 13 years, they were aware that younger users were able to access the game and were using it and failed to implement adequate safeguards to protect them from being bullied or harassed by other users.
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The COPPA violation cited by the FTC involves the exposure of children to content and social dynamics that are considered harmful to them. As a result, Epic Games is being forced to apply some default configurations on any accounts they suspect are being used by individuals younger than 13 years old.
The FTC Accuses Epic Games of Using “Dark Patterns” to Generate Revenue
Epic Games was slapped with another $245 million fine for using what the agency categorized as “dark patterns”, referring to billing practices that mislead gamers to make purchases without them being entirely aware that they were spending real money.
The agency alleged that Epic Games used tricky designs and overly simplified checkout procedures to prompt consumers to make purchases that they did not intend to. The FTC cited examples such as purchases made during the loading process of the game and while the game was being reactivated after being in sleep mode.
Moreover, children who played the game made purchases without their parents’ authorization as the interface made it easy for them to buy things after they had added a payment method.
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One example was the game’s virtual currency known as V-bucks, which is used to purchase digital goods such as makeup and apparel for Fortnite’s characters. The FTC alleged that Epic designed the checkout process for V-bucks in a way that children just had to press one button to get what they wanted without requiring the consent of the cardholder or fully disclosing how much real money was going to be spent as a result.
One practice that was particularly harmful was preventing users from accessing their accounts if they filed a chargeback with their bank to get a refund for these transactions.
The agency says that Epic Games’ top executives were warned several times by both employees and users that these practices were unfair and harmful to the well-being of consumers.
Epic Games Issues Statement that Addresses the FTC’s Complaints
Epic Games responded to the FTC’s complaint and fine in a separate statement where the company revealed the steps they have been taking to address some of the issues that were brought up by the agency.
“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”, the company stated.
It added: “Statutes written decades ago don’t specify how gaming ecosystems should operate. 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”.
Some of the changes implemented by Fortnite to address the COPPA violations include a daily spending limit for players under the age of 13, the creation of “Cabined Accounts” that provide a tailored experience to underage individuals, and turning off certain features such as voice and text conversations to “Nobody” by default.
As for its dark billing practices, Epic Games is launching a self-service refund system for eligible items, a hold-to-purchase mechanic that will add an additional step to confirm the purchase of an item within the game, and updates to its chargeback policy. Users will also be able to opt-out of having their card information saved.
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