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Maker of Fortnite ordered to pay $520M for 'deceptive' in-game purchases and infringement of children's privacy

2022-12-20  Sophia Zackary

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The maker of Fortnite, Epic Games, has agreed with the Federal Trade Commission (FTC), which was announced on Monday. As part of this agreement, Epic Games will pay a total of $520 million, which includes both fines and refunds. The refunds, totalling $245 million, are the most that the FTC has ever gotten in a video gaming lawsuit. The settlement deals with violations of the Children's Online Privacy Protection Act of 1998 (COPPA).

According to a statement issued by the Federal Trade Commission (FTC) chairwoman Lina M. Khan on Monday, "Epic used privacy-invasive default settings and deceptive interfaces that deceived Fortnite users, especially teenagers and minors." [Citation needed] "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," the FTC said in a statement. "Protecting the public from online privacy invasions and dark patterns is a top priority for the commission."

The fine of $275 million that Epic will pay for breaking the Children's Online Privacy Protection Act (COPPA) is the highest penalty the FTC has ever collected for a violation of a rule that it enforces. The FTC launched an investigation into Epic's privacy protection and other policies when information regarding those practices emerged during the trial of Epic's case against Apple, which took place in 2021. The settlement is the result of that investigation. On Monday, the United States Department of Justice (DOJ) submitted to a federal court in North Carolina both a complaint and a settlement agreement about that case. On December 2nd, Tim Sweeney, creator and chairman of Epic Games, signed the settlement agreement.

The Federal Trade Commission (FTC) alleged that Epic violated the Children's Online Privacy Protection Act (COPPA) through a variety of practices. These included the gathering of children's personal information without the consent of their parents and the use of default settings that matched children and teenagers with unknown users. This allegedly led to instances of harassment, bullying, sexual coercion, and other forms of harm. In addition, the FTC stated that parents who requested that the personal information of their children be erased had to "jump through unnecessary hoops," and that Epic sometimes failed to respect such requests.

The reimbursements are related to the usage of "dark patterns," which, according to a separate complaint filed with the FTC, deceived Fortnite players into making unplanned, in-game purchases. The refunds are being issued as a result of this complaint. According to the FTC's allegations, the button setup in Fortnite is "counterintuitive," "inconsistent," and "confusing," all of which lead to players being subjected to unwelcome charges based on the touch of a single button. "As a result of these strategies, customers racked up unauthorised charges of hundreds of millions of dollars."

For its part, Epic Games has produced a statement in which it details the modifications to Fortnite that it has made, the majority of which have been implemented in the last year, in response to consumer complaints and concerns around privacy. The most recent addition is a function known as "Cabined Accounts," which was introduced on December 7th.

A user who creates a cabined account declares that they are under the age of 13 (or the age of digital consent in their country); the user is then asked for an email address belonging to a parent so that the parent can give their affirmative approval for the user to play Fortnite (or Rocket League or Fall Guys). Players that are confined to their cabins won't be able to interact with other players or make purchases unless they provide their agreement (but they do have access to all previously acquired in-game content).

Epic Games said in a statement that was released on Monday that "No developer produces a game with the aim of it ending up here." "The regulations that were written many years ago do not outline how gaming ecosystems ought to function. The regulations have remained the same; but, how they are applied has developed, and the industrial procedures that have been in place for decades are no longer sufficient.

The firm stated that they agreed to the terms of the agreement because they want Epic to be at the forefront of consumer protection and give the greatest experience possible for their gamers.

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According to a news release issued by the Federal Trade Commission (FTC), Epic employees voiced their worries about the game's default settings as early as 2017, when Fortnite Battle Royale was first released. "expressing concern about the influence on youngsters in particular," these employees encouraged Fortnite to need an opt-in prompt for voice chat and cited their worries about the game's potential consequences.

"Despite this and complaints that children had been harassed, including sexually, while playing the game, the corporation resisted turning off the default settings," the FTC claimed. "Despite this and claims that children had been harassed, including sexually, while playing the game." The terms of the settlement ban Epic Games from authorising voice and text communications for minors younger than 13 years old without the prior express approval of the children's parents. It would appear that the cabined accounts feature addresses this issue.

Concerning the "dark patterns" and unintended purchases, Epic pointed to several changes it has made in the past year. These changes include the ability to return digital cosmetic items for a refund (of virtual currency); purchase commands that require holding a button (instead of merely pressing it); the ability to cancel unintended purchases up to twenty-four hours after they have been made; and an update to the company's chargeback policy, which ensures that customers who report unauthorised transactions do not incur a chargeback fee

According to the FTC, Epic "ignored more than one million customer complaints and repeated employee concerns that 'massive' numbers of users were being unlawfully charged" during the year 2017. Epic stated in their statement that was released on Monday that "the old status quo for in-game commerce and privacy has altered, and many developers' practises should be reviewed." [...] Fortnite does not conduct its business using the tactics that are alleged in the FTC's complaints.

"We will continue to be open about what players may expect when making purchases," Epic said in a statement. "We will also make sure that cancellations and refunds are simple, and we will create safeguards that help keep our ecosystem safe and exciting for audiences of all ages."

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2022-12-20  Sophia Zackary