©
Fortnite, Gears of War and Unreal Engine developer Epic Games has received record-breaking fines from the Federal Trade Commission (FTC) to settle complaints related to microtransactions and child protection rules in the hugely popular game.
In total, Epic is required to pay $520 million to settle two separate complaints, one of which is a Justice Department judgment issued in response to an allegation that the developer violated the Children’s Online Privacy Protection Act (COPPA) and the other is an administrative ruling regarding “dark schemes” that the FTC said were used to “deceive millions of gamers into making unintentional purchases.”
“Epic will pay $245 million in consumer compensation for its dark schemes and billing practices,” the Commission explains, “which is the largest FTC refund in a gaming case and the largest administrative action in history.” The company has used a variety of dark schemes to trick consumers of all ages into making unintentional in-app purchases.
“The counterintuitive, inconsistent, and confusing button configuration in Fortnite resulted in players receiving unwanted charges based on the click of a single button. For example, players could be charged when trying to wake the game, during a loading screen, or when pressing a nearby button when trying to simply view an item. This tactic has resulted in hundreds of millions of dollars in unauthorized consumer spending.”
The administrative order regarding “dark schemes” will “prohibit” Epic “from charging consumers without obtaining their positive consent.” The $245 million paid by Epic will be used to refund money to consumers. In its ruling, the FTC also accuses Epic of blocking Fortnite accounts of customers who have submitted refund requests in the past.
“The FTC asserts that Epic blocked the accounts of customers who disputed unauthorized charges on their credit cards,” the Commission said in a statement. “Consumers whose accounts have been suspended lose access to all purchased content, which can be worth thousands of dollars. Even when Epic agreed to unban the account, consumers were warned that they could be permanently banned if they disputed any future charges.”
In a separate ruling, Epic is ordered to pay a $275 million fine for violating the COPPA rule – the largest fine ever received for violating an FTC ruling. The commission said that Fortnite’s default in-game privacy settings “put children and teens at risk” and that Epic collected personal information from players under the age of 13.
Epic’s settings allow users to have real-time text and voice conversations by default. The FTC claims that these default settings, and Epic’s role in matching kids and teens with strangers to play Fortnite co-op, have harmed kids and teens. Children and teenagers have been subjected to bullying, threats, harassment, and dangerous and traumatic topics such as suicide while playing Fortnite. Epic knew that many children played Fortnite – as evidenced by surveys of Fortnite users, licensing and marketing of Fortnite toys and merchandise, player support and other company communications – and collected children’s personal data without first obtaining verifiable parental consent. The company also required parents who requested the deletion of their children’s personal information go through unreasonable obstacles, and sometimes did not comply with such requests.
In addition to deleting information collected in violation of COPPA rules, the FTC directed Epic to create a new privacy protection program that takes into account the issues of the Commission and undergo regular independent audits. The FTC said it will publish the new agreement in the Federal Register “soon.”