Epic games, the creators of the popular game Fortnite, has agreed to pay $520 million dollars in relief in two separate suits filed by the FTC. The first agreement pays $275 million in monetary penalties for alleged violations of the Children’s Online Privacy Protection Act (COPPA) and the second agreement pays $245 million for the FTC to refund to consumers for deceptive purchasing and billing practices. Both represent record-breaking amounts for both FTC penalties and administrative order refunds.
The Department of Justice filed a federal court order on behalf of the FTC alleging that Epic “used privacy-invasive default settings and deceptive interfaces that tricked Fortnite users, including teenagers and children,” according to FTC Chair Lina M. Khan. While Epic’s video game Fortnite is generally free to download and play, it charges users for downloadable content such as costumes and dances. The administrative complaint alleges that Epic used dark patterns, user interfaces designed to trick users into desired actions, to trick users into purchases and allowed children to make unauthorized charges without parental consent.
The FTC states that dark patterns were used to trick players of all ages into making unintended in-game purchases. The button configuration for purchases was often confusing and counter-intuitive which caused many of the games 400 million users world-wide to incur unwanted charges with a single button push. This amounted to hundreds of millions of dollars in unauthorized, unwanted charges. The FTC also stated that children were allowed to make unauthorized charges without parental consent. Up until 2018, no parental involvement was required for the purchase on V-bucks, the in-game currency. When parents disputed these charges with their credit card companies, the FTC alleged that Epic locked the accounts and consumers lost access to all of their purchased content. There were more than 1 million user complaints of unauthorized charges filed against Epic.
As part of the proposed administrative order, in addition to the $245 million to be used to refund consumers, Epic is prohibited from using dark patterns or charging users without affirmative consent. Epic is also barred from blocking users from accessing their accounts after disputing charges. These prohibitions and refunds are entirely separate from the $275 million Epic will pay in penalties for privacy violations.
The FTC asserts that Epic violated the COPPA Rule by collecting personal information from children under 13 who played Fortnite with out informed consent from their parents. They also violated the Act’s prohibition against unfair practices by making voice and text chat communications default to on for children and teens. The default on settings harmed children by matching them with strangers and adults in games where they were subject to bullying, harassment, threats, and other psychologically damaging experiences. In addition to the penalty for violating the COPPA Rule, which is paid to the U.S. Treasury, the proposed order will prohibit Epic from enabling text or voice communications without express consent of parents, for children, or parental or self-consent for teens.
Epic responded to the proposed FTC agreement today on their website by stating, “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.” They detailed plans for the changes they intend to make to comply with the FTC’s prohibitions.
Notable among the changes are the introduction of cabined accounts, in which players under the age of 13, or the age of digital consent where they live, will be provided a tailored Fortnite experience while they await parental consent to participate in the online game. Cabined accounts will not have access to chat features or purchases. Parental controls will be easily accessible in the Lobby menu and the Epic account portal and will include the option to require a PIN to accept and send friend requests and authorize purchases, which will be limited for players under 13. Also notable is a commitment for more transparency with regards to refunds and cancellations of purchases, as well as the introduction of a hold-to-purchase mechanic for all in-game purchases.
While it seems Epic may have been negligent in the past when it came to quickly addressing children’s privacy concerns and predatory billing designs, Epic seems committed to not repeating past mistakes. With a commitment to lead the industry in improvements going forward, all of Epic’s games, including Fortnite and Rocket League, should be safer places for children and consumers.
