The Federal Trade Commission (FTC) announced today that Epic Games has agreed to pay a $520 million fine, which the FTC says Epic received for violating the Children’s Online Privacy Protection Act (COPPA) within Fortnite It is. Specifically, the FTC alleged that Epic used invasive default settings to trick young players into making unintended purchases.
Of the fine, $275 million is the financial penalty Epic must pay for the COPPA violation. This is the largest fine of its kind paid to the FTC; Epic must also pay $245 million in consumer refunds for “its dark patterns and billing practices” (the FTC’s words). This is also the largest refund ordered by the FTC, setting a record.
The FTC’s decision states that Epic knew that children were playing Fortnite but failed to obtain verifiable parental consent. It also made it difficult for parents to ask Epic to delete their children’s data. In addition, when the complaint was filed, Epic Game’s default settings turned on the text and voice chat features unless the user specifically turned them off. This left children playing the Game unprotected, especially when matched with strangers who bullied, harassed, or threatened them.
The FTC also alleged that Epic used “dark patterns” and confusing user interfaces to trick players into making unintended purchases. Epic also charged account holders without their permission (i.e., parents whose children charged their credit cards without their consent) and blocked the accounts of users who disputed the charges.
In addition to the fine, the FTC proposed an order prohibiting Epic from enabling voice and text chat for children and teens without parental consent. Another order prohibits publishers from using the aforementioned “dark patterns” to enable unauthorized purchases.
FTC’s and Epic’s responses
Epic Games responded to the ruling in a blog post, stating, “The law has not changed, but its application has evolved and longstanding industry practices are no longer sufficient. We accepted this agreement because Epic wants to be at the forefront of consumer protection and provide the best possible experience for our players. Over the past several years, we have made changes to ensure that our ecosystem meets the expectations of players and regulators.” Hopefully, this will be a useful guide for others in the industry.
Epic listed all the changes it has made to Fortnite since its release to prevent problems that have resulted in fines. Among the changes noted were the recently implemented “Cabined Accounts” (essentially protected accounts for younger players) and less invasive default settings. It also added that it no longer engages in “dark practices” such as storing payment information by default.
Epic Games is currently engaged in a legal battle with Apple over Apple’s cost-sharing in its App Store. Apple also paid an FTC fine in 2014 for allowing children to make purchases without parental consent.
FTC Chair Lina M. Khan said in a statement, “Protecting the public, especially children, from online privacy violations and dark patterns is a top priority for the Commission, and this enforcement action is a clear signal to businesses that the FTC is cracking down on these illegal activities. “