Image: Epic Games
Fortnite creator Epic Games will pay the FTC $520 million over violations of child privacy and ‘deceptive’ in-game purchases.
Developer of Fortnite and the Unreal Engine Epic Games have agreed to pay $520 million in fines and refunds, following a settlement with the Federal Trade Commision (FTC) this week. The FTC had accused Epic of violating the Children’s Online Privacy Protection Act of 1998 (COPPA), and including ‘deceptive interfaces’ that tricked children into making in-game purchases.
The FTC will secure $275 million in fines following Epic’s violation of COPPA, its largest-ever penalty collected for a case like this. In addition to that amount, Epic will also pay $245 million in refunds to players affected by what FTC calls ‘dark patterns and billing practices’. The developer will have to make changes to Fortnite as well, such as disabling voice and text chat by default when booting up the game.
Chairwoman of the FTC, Lina M.Khan released a statement on the case this week, saying:
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.
In the statement, the FTC points out two major privacy violations in Fortnite alone: Epic violated COPPA by, “collecting personal information from children under 13 who played Fortnite, a child-directed online service, without notifying their parents or obtaining their parents’ verifiable consent,” and violated the FTC Act by enabling in-game voice and text chat features for underage children and teenagers by default.
The FTC points out that surveys of Fortnite users and other ‘company communications’ reveal that Epic collected personal data from kids without their parents’ verifiable consent and even worse, parents who wanted that data to be deleted had to jump through ‘unreasonable hoops’ to do so. Even then, the company would sometimes fail to honour such requests. On the chat options, the FTC argues that children and teens exposed to the default chat have been, “bullied, threatened, harassed, and exposed to dangerous and psychologically traumatizing issues such as suicide while on Fortnite.”
So, you have the privacy violations, and then you have the in-game purchases. The FTC argues that Fortnite’s in-game menus use ‘a variety of dark patterns’ to trick players into making unintended purchases. In a statement, the FTC says that, “players could be charged while attempting to wake the game from sleep mode, while the game was in a loading screen, or by pressing an adjacent button while attempting simply to preview an item. These tactics led to hundreds of millions of dollars in unauthorized charges for consumers.”
The sleep mode issue might seem like a head-scratcher, but it refers to a loading screen bug where the game would have already loaded in the in-game shop menu while players were still on the loading screen. By randomly tapping buttons, they would make accidental purchases without realising it. In a more in-depth document, the FTC points out another dubious practice from Epic in undoing accidental purchases. The ‘undo purchase’ button, which was once large and simple to access, was relocated to the bottom of the screen and made into a press-and-hold option. Email snippets confirm that this change was made specifically to reduce purchase cancellations and it worked, too: Epic saw a 35% decrease in cancellations after the change went live.
In a statement, Epic replied to these charges saying, “The old status quo for in-game commerce and privacy has changed, and many developer practices should be reconsidered. […] The practices referenced in the FTC’s complaints are not how Fortnite operates.”
These fines will hurt Epic, but it’s more of a show of force from the FTC - a regulator that is pushing for major industry checks across the board. The FTC has also sued Microsoft for its $75 billion purchase of Activision Blizzard, but we’ll have to wait and see how that turns out next year.
