The Federal Trade Commission (FTC) has fined Epic Games $520 million on the grounds of violating children’s privacy laws and tricking Fortnite players into unintended purchases.
Announced by the FTC on Monday, the commission explains Epic Games “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.”
They further explain the fine is made up of two different “record-breaking” settlements, $275 million for the COPPA violation (the highest penalty ever given for violating that law), and $245 million refunded to players “for its dark patterns and billing practices.” The latter is not just the FTC’s largest refund in a gaming-related case, but the “largest administrative order in history.”
“Additionally, in a first-of-its-kind provision,” the FTC explains, “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.”
FTC Chair Lina M. Khan continued, explaining, “As our complaints note, Epic used privacy-invasive default settings and deceptive interfaces that tricked Fortnite users, including teenagers and children.”
“Protecting the public, and especially children, from online privacy invasions and dark patterns is a top priority for the Commission, and these enforcement actions make clear to businesses that the FTC is cracking down on these unlawful practices,” Khan declared.
Associate Attorney General Vanita Gupta added “The Justice Department takes very seriously its mission to protect consumers’ data privacy rights. This proposed order sends a message to all online providers that collecting children’s personal information without parental consent will not be tolerated.”
FTC Director of the Bureau of Consumer Protection Samuel Levine also drove the point home. “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.”
“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.”
The FTC announcement continues, showing the COPPA-based complaint argued and proved that Fortnite players under 13 years of age had their personal information collected without notification or consent of their parents, and violated the FTC’s Act “by enabling real-time voice and text chat communications for children and teens by default.”
Along with Epic Games making parents “jump through unreasonable hoops” to have their child’s information deleted — “and sometimes failed to honor such requests” — the default text and voice communication meant children and teens “have been bullied, threatened, harassed, and exposed to dangerous and psychologically traumatizing issues such as suicide while on Fortnite.”
Epic Games employees even expressed concerns with the default option, but to no avail. The complaint even states while there is a button to turn off voice chat “Epic made it difficult for users to find.”
As such, the proposed federal court order dictates voice and text chat in Fortnite must be first enabled by a parent (for under 13s) or teenager providing their parents’ consent via privacy settings. Epic Games must also delete all previously gathered data that violated COPPA, “establish a comprehensive privacy program,” and undergo “regular, independent audits.”
As for the “Illegal Dark Patterns” complaint, the FTC argued Fortnite‘s “counterintuitive, inconsistent, and confusing button configuration led players to incur unwanted charges based on the press of a single button.” This included when waking the game from sleep mode, loading, or “pressing an adjacent button while attempting simply to preview an item.”
This led to “hundreds of millions of dollars in unauthorized charges for consumers.” In addition, children could buy V-Bucks without parental or card holder consent “simply by pressing buttons” until 2018.
When consumers “disputed unauthorized charges with their credit card companies,” Epic Games then locked their Fortnite accounts, losing access to all content purchased. Those who had their accounts unlocked “were warned that they could be banned for life if they disputed any future charges.”
The proposed administrative order, along with the $245 million refund, “prohibits Epic from charging consumers through the use of dark patterns or from otherwise charging consumers without obtaining their affirmative consent,” or “blocking consumers from accessing their accounts for disputing unauthorized charges.”
In both proposed administrative orders, the Commission voted 4-0 to issue the formal complaint.