Fortnite Game Publisher Hit With Half-Billion Dollar Penalty
The Federal Trade Commission has secured agreements requiring Epic Games, Inc., creator of the popular video game Fortnite, to pay a total of $520 million in relief over allegations the company violated the Children’s Online Privacy Protection Act (COPPA) and deployed design tricks, known as “dark patterns,” to dupe millions of players into making unintentional purchases.
“As our complaints note, Epic used privacy-invasive default settings and deceptive interfaces that tricked Fortnite users, including teenagers and children,” said FTC Chair Lina M. Khan. “These enforcement actions make clear to businesses that the FTC is cracking down on these unlawful practices.”
The FTC’s action against Epic involves two separate record-breaking settlements. As part of a proposed federal court order filed by the Department of Justice on behalf of the FTC, Epic will pay a $275 million monetary penalty for violating the COPPA Rule—the largest penalty ever obtained for violating an FTC rule.
Additionally, in a first-of-its-kind provision, Epic will be required to adopt strong privacy default settings for children and teens, ensuring that voice and text communications are turned off by default. Under a separate proposed administrative order, Epic will pay $245 million to refund consumers for its dark patterns and billing practices, which is the FTC’s largest refund amount in a gaming case, and its largest administrative order in history.
Message to all online providers
“The Justice Department takes very seriously its mission to protect consumers’ data privacy rights,” said Associate Attorney General Vanita Gupta. “This proposed order sends a message to all online providers that collecting children’s personal information without parental consent will not be tolerated.”
Epic’s video game Fortnite is generally free to download and play but charges users for in-game items such as costumes and dance moves. The game has more than 400 million users worldwide. The FTC alleged in two separate complaints that North Carolina-based Epic engaged in several unlawful practices.
“Epic put children and teens at risk through its lax privacy practices, and cost consumers millions in illegal charges through its use of dark patterns,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Under the proposed orders announced today, the company will be required to change its default settings, return millions to consumers, and pay a record-breaking penalty for its privacy abuses.”
In a complaint filed in federal court, the FTC alleged that Epic violated the COPPA Rule by collecting personal information from children under 13 who played Fortnite, a child-directed online service, without notifying their parents or obtaining their parents’ verifiable consent.
Epic also violated the FTC Act’s prohibition against unfair practices by enabling real-time voice and text chat communications for children and teens by default, the FTC alleged.
Illegal dark patterns
In a separate administrative complaint, the FTC alleged that Epic used “dark patterns” to trick players into making unwanted purchases and let children rack up unauthorized charges without any parental involvement.
The FTC said Epic ignored more than one million user complaints and repeated employee concerns that “huge” numbers of users were being wrongfully charged. In fact, Epic’s changes only made the problem worse, the FTC alleged. Using internal testing, Epic purposefully obscured cancel and refund features to make them more difficult to find.
As part of the proposed administrative order with the FTCover the company’s unlawful billing practices, Epic must pay $245 million, which will be used to provide refunds to consumers.