Epic Games, the video game company that created Fornite, has reached a settlement to pay $520 million for illegally collecting personal information from children, allowing minors to communicate with strangers during gameplay as a default setting and using tricks to trigger unintended purchases.
Epic Games creator of the video game Fortnite, to pay a total of $520 million over FTC allegations Epic violated the Children’s Online Privacy Protection Act and deployed dark patterns to dupe millions of players into making unintentional purchases: https://t.co/yHaQx8VXlu
— FTC (@FTC) December 19, 2022
The Federal Trade Commission (FTC) filed two separate complaints against the company. In the first, it accused Epic of illegally collecting personal information from children under the age of 13, without parental authorization in many cases. It also potentially harmed young players by pairing them with strangers in Fortnite while leaving the ability to have live communications as a default setting. In the second, Epic was found to have used manipulation techniques called "dark patterns" to deceive millions of players into unwittingly buying game items. This aspect is especially serious in the case of children, who on many occasions generated a large debt with their parents' credit card without their parents' knowledge.
Epic agreed to pay $275 million to settle allegations concerning violations of the Children's Online Privacy Protection Act (COPPA). The company placed obstacles in front of parents who wished to remove their children's data, occasionally ignoring such requests altogether, according to the complaint filed Monday in U.S. District Court in the Eastern District of North Carolina, where Epic is headquartered. The fine broke the record for the highest penalty involving violation children's privacy, which stood at $170 million paid out by Google in 2019.
The FTC also denounced the harm caused to children and teenagers by the default settings in the game's chat, which allowed real-time voice and text interactions with strangers. The regulator alleges that this, along with "matching children and teens with strangers to play Fortnite together" allowed them to be "bullied, threatened, harassed and exposed to dangerous and psychologically traumatizing issues such as suicide while playing Fortnite."
As for the second dispute, Epic agreed to pay $245 million to reimburse consumers for deceptive practices to trick players of all ages into making unintended purchases. In 2021, the FTC announced its intention to crack down on these "illegal dark patterns" that manipulate consumers. Again, this is a record amount for this category of fine. The previous high was for Vonage, an Internet telephone operator that had to reimburse $100 million to its customers for the use of "dark patterns" on account cancellations.
In a statement, FTC chairwoman Lisa Khan stressed that the commission will maintain this heavy-handed policy. "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."
Epic announces the launch of "cabined accounts"
Epic issued a statement pointing out that the video game industry is evolving at a rapid pace, and old industry standards are no longer sufficient to protect gamers. "No developer creates a game with the intention of ending up here. We accepted this agreement because we want Epic to be at the forefront of consumer protection and provide the best experience for our players."
In addition, the company announced the creation of a new type of account for younger users, which it called "cabined accounts," with live chat and in-app purchases disabled in default settings. Epic further noted that players under the age of 13, or the age of digital consent in their respective countries, would be assigned to cabined accounts by default. As long as they do not provide a parent's email address, they will not be able to access features such as live voice chats.