Epic Games, maker of the hit Fortnite game, will pay the Federal Trade Commission a record $520 million to settle allegations that it violated children’s privacy.
The North Carolina-based company’s popular game defrauded millions of players into unintended purchases, the Federal Trade Commission said in a statement on Monday.
As a result, Epic agreed to pay $275 million for violating the Children’s Online Privacy Protection Act — the largest penalty ever obtained for breaching an FTC rule.
Epic will also pay $245 million in refunds to consumers, which the regulator said was the largest refund in a gaming situation. Under the agreement, Epic will enforce new default privacy settings for children and teens that will ensure that voice and text communications are turned off by default.
Federal Trade Commission Chair Lina M. Khan said statement. “Protecting the public, especially children, from invasions of online privacy and dark patterns is a top priority for the commission, and these enforcement actions demonstrate to businesses that the FTC is cracking down on these illegal practices.”
Epic Games said in a statement It accepted the deal so as to be “at the forefront of consumer protection and delivering the best experience for our players”.
In its release, Epic referenced the ancient laws of gaming and said the video game industry is fast-moving and expectations are high.
“This proposed order sends a message to all online service providers that the collection of children’s personal information without parental consent will not be tolerated,” Associate Atty said. General Vanita Gupta in a statement.
The FTC said Epic violated its rules by collecting personal information from children under 13 who played Fortnite, without notifying their parents. It also broke the rules by enabling real-time text and voice chat communications for kids and teens by default. The FTC has said that children and teens have been bullied, threatened, harassed, and experienced distressing issues such as suicide while in Fortnite.
The regulator said Epic employees were warning about the default settings as early as 2017. Although Epic added a button that allowed users to turn off voice chat, it was difficult to find, the FTC said.
Epic said Monday that it has already added additional high-privacy default settings for all players under 18, including changes like auto-hide profiles and players under 16 also have a mature language filter set by default.
In a separate complaint, the FTC alleged that Epic Games used so-called dark patterns to trick users into making purchases.
“Players can charge while trying to wake the game from sleep, while the game is in a loading screen, or by pressing an adjacent button while trying to preview an item,” said the organizer. “These tactics have resulted in hundreds of millions of dollars in unauthorized fees being paid to consumers.”
The FTC said Epic had received more than 1 million complaints from users, and there were concerns that a significant number of users had been wrongly accused.
“All game developers must rethink the steps they have taken to streamline payment flows in favor of practices that provide the greatest clarity to players when making purchasing decisions,” Epic said in its statement.