On Monday, the US Federal Trade Commission (FTC) announced a settlement of $520 million with Epic Games, the company behind the battle royale video game Fortnite. The settlement was reached over allegations that Epic violated the Children's Online Privacy Protection Act (COPPA) and deployed deceptive techniques known as "dark patterns" to induce millions of players to make unintended purchases. As part of the settlement, Epic will pay a $275 million penalty for breaching children's privacy laws and will change its default privacy settings. The company will also pay $245 million in refunds to users who were tricked into making unwanted charges.
The FTC accused Epic of using privacy-invading default settings and misleading interfaces to deceive Fortnite users, including teenagers and children. In a statement, FTC Chair Lina M. Khan said, "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."
We’ve reached a settlement with the FTC. Our response: https://t.co/hrzyud8VEc
— Epic Games Newsroom (@EpicNewsroom) December 19, 2022
Fortnite is a hugely popular battle royale game that is free to download and play on multiple platforms including consoles, PC and Mobile. Similar to other free-to-play games, Fortnite generates its revenue by selling in-game items such as costumes and dance moves. In a complaint filed in a federal court, the FTC alleged that Epic violated the COPPA Rule by collecting personal information from children under 13 who played Fortnite without obtaining verifiable consent from their parents. Epic also allegedly violated the FTC Act's prohibition against unfair practices by default enabling real-time voice and text chat communications for children and teenagers.
In a separate complaint, the FTC accused Epic of using dark patterns to trick players into making unwanted purchases and allowing children to incur unauthorised charges without any parental involvement. As a result of the settlement, Epic will be required to change its default settings, return millions of dollars to consumers, and pay a record-breaking penalty for its privacy abuses.
Today we announced the rollout of Cabined Accounts, a new type of Epic account that will provide a tailored experience that is safe and inclusive for younger players. Learn more: https://t.co/qHyOqq8Ifu
— Epic Games Newsroom (@EpicNewsroom) December 7, 2022
Epic Games' Fortnite has been a massive commercial success, generating over $9 billion in its first two years of existence. With over 400 million users worldwide, the game has become a cultural phenomenon, with its iconic dance moves and costumes being emulated by players around the globe.
However, the settlement with Epic Games is a significant development in the ongoing efforts by regulators to protect consumers, particularly children, from online privacy invasions and deceptive practices. FTC's allegations against Epic highlight the importance of ensuring that companies operating in the online space respect consumer privacy and it also serves as a cautionary tale for other companies that might be tempted to engage in similar behaviour.