Epic Games, developer of the online game Fortnite, has settled with the Federal Trade Commission and the Justice Department over allegations it violated children’s privacy law as well as duped customers into making unwanted purchases with its game design.
The developer will pay $275 million in civil penalties to settle the children’s privacy claims and will refund those who made unwanted purchases an additional $245 million, the FTC announced Monday.
Epic Games is alleged to have “collected personal information from children, including their names, email addresses, and identifiers used to keep track of players’ progress, purchases, settings and friends lists” without notifying parents or getting their consent as required by the Children’s Online Privacy Protection Act (COPPA), according to the Justice Department.
Federal authorities also accused Epic Games of maintaining default privacy settings that, if unaltered by the user, broadcast the display names of child and teenage players to adult players of Fortnite.
“Parents have a right to know and to consent before companies collect their children’s personal information. The department is committed to enforcing the protections against unauthorized collection of information from consumers, particularly children,” Principal Deputy Assistant Attorney General Brian Boynton said in the DOJ release.
As a result of these alleged violations, federal officials chose to impose the largest civil penalty ever levied for a COPPA violation. Epic Games will also be required to obtain parental consent before using previously acquired child information, and to delete certain information about children previously collected.
“This historic civil penalty, totaling over a quarter-billion dollars, lays down a marker for online service providers everywhere. The unauthorized collection of personal information from children online violates the law,” said U.S. Attorney Michael Easley for the Eastern District of North Carolina.
In a separate settlement with the FTC, Epic Games will pay to resolve allegations that it tricked users into making unwanted purchases through the design of Fortnite.
Alleged purchase-inducing design choices, called dark patterns, included a puzzling button configuration that, in the FTC’s example, saw players 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.”
Epic Games was also accused by the FTC of locking the accounts of users who disputed charges, withholding from them any and all purchased content.
In a release, Epic Games detailed the changes it made in light of the two settlements.
“No developer creates a game with the intention of ending up here. … The laws have not changed, but their application has evolved and long-standing industry practices are no longer enough. We accepted this agreement because we want Epic to be at the forefront of consumer protection,” the statement read.
Changes implemented by Epic Games, and recommended to other developers selling their games on Epic’s digital storefront, include:
• Offering an explicit yes or no option to save payment information.
• A “hold to purchase” mechanic that reconfirms the customer’s intent to buy something.
• Instant purchase cancellations and self-service refunds.
• Updating bank chargeback policies to account for cases without fraud, and unlocking accounts previously banned due to chargebacks.
• Parental controls, including a PIN to make or accept friend requests.
• A daily spending limit for users under 13.
“We share the underlying principles of fairness, transparency and privacy that the FTC enforces, and the practices referenced in the FTC’s complaints are not how ’Fortnite’ operates,” the Epic Games statement concludes.
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