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Fortnite costs Epic $520 million on charges of child privacy violations, microtransaction abuse

Fortnite manufacturer Epic Games will pay a combined $520 million, in both penalties and refunds, under a settlement reached with the Federal Trade Commission announced Monday. The settlement concerns violations of the Children’s Online Privacy Protection Act of 1998 (COPPA), and the $245 million refunds are the largest the FTC has ever obtained in a video game case.

“Epic used privacy-invading default settings and deceptive interfaces that misled Fortnite users, including teens and children,” FTC Chair Lina M. Khan said in a statement released Monday. “Protecting the public, and especially children, from online invasions of privacy and dark patrons is one of the commission’s top priorities, and these enforcement actions make it clear to companies that the FTC is taking action. strong against these illegal practices”.

The $275 million that Epic will pay for violating COPPA is the largest penalty the FTC has collected for violating a rule it enforces. The settlement is the result of an FTC investigation into Epic’s privacy protections and other practices, which came to light during the trial of its lawsuit against Apple in 2021. The Justice Department filed a complaint and the settlement that complaint in a North Carolina federal court. on Monday. Epic Games founder and president Tim Sweeney signed the deal on December 2.

The FTC alleged that Epic violated COPPA with a variety of practices, including collecting personal information from children without parental consent and default settings that matched children and teens with strangers, resulting in incidents of harassment, intimidation, coercion sexual and other damages. . In addition, parents who asked to have their children’s personal information removed had to “jump through unreasonable hoops,” the FTC said, “and sometimes [Epic] did not comply with such requests.”

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The refunds, stemming from a separate complaint with the FTC, concern the use of “shady employers” that the commission says misled. Fortnite players to make unwanted in-game purchases. “FortniteCounter-intuitive, inconsistent, and confusing button layouts led players to incur unwanted charges based on pressing a single button,” the FTC alleged. “These tactics generated hundreds of millions of dollars in unauthorized charges to consumers.”

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Epic Games, for its part, issued a statement describing the changes it has made to Fortnite, many of them in the last year, in response to consumer complaints and privacy concerns. The most recent is a feature called “Cabin Accounts,” announced on December 7.

An in-cabin account is one set up by a user who indicates that they are under the age of 13 (or their country’s age of digital consent); they are then asked for a parent’s email address, so they can affirmatively consent for them to play Fortnite (either rocket league either Fall Guys). Until that consent is received, players in the booth will not have access to chat or purchase features (but they do have access to all previously purchased in-game content).

“No developer creates a game with the intention of ending up here,” Epic Games said in Monday’s statement. “Bylaws written decades ago do not specify how gaming ecosystems should operate. The laws have not changed, but their application has evolved and traditional industry practices are no longer sufficient.

“We accept this agreement because we want Epic to be at the forefront of consumer protection and provide the best experience for our players,” the company said.

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The audio and chat settings menu in Fortnite.

A screen showing the new settings menu for chat, voice, and other interactions. Epic Games introduced these changes in September 2022.
Image: Epic Games

The FTC press release said that Epic’s own employees raised concerns about the default settings as far back as 2017, when Fortnite Battle Royale thrown out. These employees urged that Fortnite require a subscription notice for voice chat, “citing concern about the impact on children in particular.”

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“Despite this and reports that children had been harassed, including sexually, while playing the game, the company resisted turning off the default settings,” the FTC said. The agreement prohibits Epic Games from enabling voice and text communications for children under the age of 13 unless their parents provide affirmative consent. The cockpit accounts feature seems to address this.

Regarding “dark patterns” and unwanted purchases, Epic noted several changes it made last year, including the means to return digital cosmetic items for a refund (of virtual currency); buy commands that require you to hold down a button (instead of just pressing it); the means to cancel unwanted purchases up to 24 hours after they are made; and update the company’s chargeback policy, so that customers who report unauthorized transactions do not have their Epic Games accounts automatically suspended.

The FTC said that Epic, since 2017, “ignored more than a million user complaints and reiterated employee concerns that an ‘enormous’ number of users was being improperly charged.” Epic, in its statement on Monday, said “[t]The old status quo for in-game commerce and privacy has changed, and many developer practices need to be reconsidered. […] [T]The practices referenced in the FTC complaints are not how Fortnite Opera.”

“We will continue to be upfront about what players can expect when making purchases, ensure cancellations and refunds are simple, and build in safeguards that help keep our ecosystem safe and fun for audiences of all ages,” Epic said.

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