Once again, it appears that Epic Games has been hit hard, as they have been found guilty of numerous unfair “industry practices” and are being severely punished as a result.
The FTC has settled claims that Fortnite developer Epic Games used “dark patterns” and other design tactics to deceive millions of players into making unintended purchases, in violation of the Children’s Online Privacy Protection Act (COPPA) and has secured settlements requiring the company to pay a total of $520 million in fines.
As reported by The Wall Street Journal, The FTC’s case against Epic includes not one but two big settlements. After the FTC and the Department of Justice filed a proposed federal court order, Epic agreed to pay the biggest penalty ever obtained for violating an FTC rule, which is $275 million for breaking the COPPA Rule.
It also claimed that Epic broke the law by allowing children and teenagers to engage in real-time voice and text interactions by default, which led to bullying, threats, harassment, and exposure to potentially harmful and traumatic content for some players. Epic will no longer be able to enable voice and text communication for kids and teens without parental permission via a privacy setting.
Furthermore, the FTC has suggested an administrative order in which Epic will pay $245 million to repay customers for its shady patterns and billing practices, making it the largest refund amount in a gaming complaint and the largest administrative order in FTC history.
The Chairwoman of FTC, Lina M. Khan said:
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 addition, Associate Attorney General, Vanita Gupta clearly stated that:
The Justice Department takes very seriously its mission to protect consumers’ data privacy rights. This proposed order sends a message to all online providers that collecting children’s personal information without parental consent will not be tolerated.”
The total sum of the two settlements amounts to roughly over half a billion dollars, $520 million to be exact. In the settlements with the FTC, Epic neither admitted nor denied the FTC’s charges. In addition to establishing a privacy program to address the issues the FTC raised in its complaints, Epic has also agreed to make a number of improvements to Fortnite to protect users as part of the two settlements. The agency also stated that the company was required to get frequent and independent audits.
According to the Federal Trade Commission, customers who believe they were improperly charged for in-game purchases can go to a website that was set up by the commission in order to request refunds. According to the FTC, it will take many months, if not longer, to investigate those claims.
There is a lot more to the story than what you have read so far, but this is the crux of it. If you’re curious, you can read Epic’s official statement on the topic, in which they’ve laid out the specifics in great detail. Till then, let us know in the comments what you think of this case, and how big of an impact would this have on Epic.