Epic Games fined 520 million by FTC due to privacy concerns and ”dark patterns” in their popular game Fortnite.
A $520 million settlement between Epic Games and the Federal Trade Commission resolves complaints that the Fortnite developer violated children’s online privacy protection regulations and deceived gamers into purchasing in-game products.
The settlement includes a record $275 million fine for alleged COPPA (Children Online Privacy Protection Rule) violations as well as $245 million for a purchasing arrangement that might deceive gamers and allow them to make unintended purchases.
Why did Epic Games fined 520 million?
The FTC claims in its complaint that Epic amassed personal data from Fortnite gamers under the age of 13 without their consent or knowledge; as a result, Epic games fined 520 million. The commission also asserts that by turning on text and voice chat as default settings in games, FTC accused Epic of injuring young people saying that: “children and teens have been bullied, threatened, harassed, and exposed to dangerous and psychologically traumatizing issues such as suicide while on Fortnite.”
As part of the FTC’s proposed court order, Epic will need to obtain parents’ permission before enabling voice and text chat for underage players. Epic will also have to delete any personal information it previously collected from Fortnite players “unless the company obtains parental consent to retain such data or the user identifies as 13 or older through a neutral age gate.”
245 million fine over ‘’unwanted purchases’’
Additionally, Epic is forking over $245 million to compensate customers for its claimed use of sneaky techniques that trick gamers into “making unnecessary purchases and letting children rack up unlawful charges without any parental intervention.” A user interface with a “dark pattern” is one that is intended to deceive users into choosing choices that are not in their best interests.
In Epic’s case, the FTC asserts that Fortnite’s “counterintuitive, inconsistent, and confusing button layout” caused users to unintentionally spend hundreds of millions of dollars “just on the push of a single button” on in-game transactions. Together with COPPA violation and unwanted purchase accusations, Epic Games fined 520 million dollars.
Epic Games had taken precautions regarding the issue
Some of these issues have already been fixed by Epic. In Fortnite, Rocket League, and Fall Guys, Epic Titles introduced new “Cabined Accounts” earlier this month for children under the age of 13, which restrict specific features like text and voice chat, in-game purchases, and the ability to download games not produced by Epic without parental permission. Additionally, it added parental controls in 2019 and last year made parent verification services available to all platform developers at no cost.
FTC accusations are rough
The FTC provides some instances of this problem and warns consumers that they could “be charged while attempting to wake the game from sleep, while the game was in a loading screen, or by pressing an adjacent button while attempting simply to preview an item.”
Additionally, the FTC claims that Epic Games charged users’ accounts without their consent. According to the agency, Epic previously permitted kids to buy V-Bucks, the virtual currency used in Fortnite, without their parents’ or credit cardholders’ permission. Additionally, the complaint claims that Epic “locked the accounts of customers” who attempted to contest the unlawful charges and threatened to ban them “for life” if they attempted to contest subsequent charges.
FTC will ask Epic for the refunds
According to the FTC, it plans to use the settlement to reimburse parents whose children used their credit cards for illicit transactions between January 2017 and November 2018, players who were charged for unauthorized purchases, and players whose accounts were frozen after disputing charges.
The FTC intends to provide refunds to:
- In-game currency (V-Bucks) charges for unwanted in-game items (like cosmetics, llamas, or battle passes) between January 2017 and September 2022
- Fortnite players whose accounts were locked between January 2017 and September 2022 after disputing unauthorized charges with their credit card companies
- Parents whose children used an unauthorized credit card to make a purchase in the Epic Games Store between January 2017 and November 2018
Epic accepted the agreements
After Epic Games fined 520 million, In a blog post on its website, Epic Games addressed the FTC’s allegations. They stated that it had signed the agreement in order to “be at the forefront of consumer protection and provide the best experience” for players.
The company lists the several adjustments it has previously made, including introducing Fortnite’s “undo purchase” and return token systems in 2018. Additionally, it states that single-press purchases are no longer allowed and that gamers must hold down the button to affirm their desire to purchase an item.
“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.”
– FTC Chair, Lina Khan
Epic Games revenue
The annual revenue of Epic Games is $500.0M. The data science team at Zippia discovered the following important financial KPIs after doing considerable investigation and analysis. With 1,001 employees, Epic Games has a $499,500 revenue-per-employee ratio. In 2021, Epic Games’ top revenue was $500.0M.
Epic Games, which has been on the agenda for a long time with its signature game Fortnite, is in trouble this time. Epic Games fined 520 million as a result of FTC’s accusations. and a penalty of 520 million is equivalent to the company’s annual revenue.
While Epic Games, which competed with Steam with the deals it made last year, took a big hit with the lawsuits it opened and lost against Apple and Google in a lawsuit before, the FTC’s breathing on the back of Epic Games will really shake the game company’s financials.
