The Federal Trade Commission (FTC) announced that it would charge Epic Games with a $520 million settlement over charges related to children’s privacy. Maker of popular games such as “Fortnite” and “Fall Guys” allegedly violated the Children’s Online Privacy Protection Act (COPPA) by deploying “design tricks, known as dark patterns, to dupe millions of players into making unintentional purchases,” according to the FTC.
The total of $520 million is actually divided into two settlements, with the COPPA fine amounting to $275 million — making it the largest-ever penalty for violating an FTC rule. The remaining sum ($245 million) is a fine to refund customers for what the FTC calls “dark patterns and billing practices.” That figure is also FTC’s largest-ever refund amount in a gaming case. On its end, Epic said it would pay both fines.
“Statutes written decades ago don’t specify how gaming ecosystems should operate. The laws have not changed, but their application has evolved, and long-standing industry practices are no longer enough,” Epic wrote in a statement. “We accepted this agreement because we want Epic to be at the forefront of consumer protection and provide the best experience for our players.”
On the heels of FTC’s decision, FTC has updated its payment flows to offer a “yes” or “no” option to save payment info, as well as instant purchase cancellations and self-service refunds.
But FTC also had a problem with Epic’s live text and voice communication features, which were set to be turned on by default. According to the Commission, this has caused children to be exposed to harassment and abuse — especially since Epic had no way of ensuring that children and adults would not be matched together in online play.
The FTC’s press release says that children have been exposed to bullying, threats, harassment, and “psychologically traumatizing issues such as suicide” while playing the game.
Epic has recently rolled out a new Cabined Accounts feature to address these sorts of issues. Now, if a player registers with a birth date that places them below their country’s age of digital consent (13 in the U.S.), then features like chat and purchasing are disabled. Also, when a child signs up – their parents will be notified via email and can then adjust their child’s settings. Right now, this feature is available for “Fortnite,” “Fall Guys” and “Rocket League.”
We can’t help but applaud FTC for pulling this through. Epic can undoubtedly pay the fine and improve its practices.
Speaking of Epic, it has raised more than $3 billion in funding in the last two years. Along with Lego, whose parent company invested $1 billion, Epic is working on building a kid-friendly metaverse.
Elsewhere in the “legal-sphere,” Epic has been embroiled in a lawsuit with Apple, accusing the tech giant of anti-competitive behavior. The video game company challenged Apple’s policy that allows it to remove products from the iOS App Store if the app reroutes customers around paying within the app, which gives Apple a 30% cut.