When Epic Games released Fortnite five years ago, the video game quickly became a cultural sensation among millions of teenagers and children. It was easy for users to sign up and start playing, chatting or messaging strangers through the game.
Some children also spent hundreds of dollars on their parents’ credit cards to buy digital goods, such as colorful outfits for game characters. Those purchases, along with branded merchandise like hero figures, have helped make Fortnite a billion-dollar business for Epic Games, with more than 400 million users.
On Monday, the U.S. Federal Trade Commission (FTC) accused the company of illegally collecting children’s personal information, harming young players by matching them up with strangers in Fortnite live chat, and using manipulative techniques known as “dark schemes” to deceive millions of players and force them to make unintended purchases, reports The New York Times. In a historic deal that caught the attention of the entire video game industry, Epic agreed to pay a record $520 million in fines and restitution to settle FTC allegations.
The decision is also evidence that the agency is following through on pledges made by Lina M. Khan, its chairwoman, to take a more assertive stance in regulating the technology industry. Earlier this month, it made an aggressive move to stop consolidation among video game makers when it filed a lawsuit to try to block Microsoft’s $69 billion acquisition of Activision Blizzard, the company behind the popular Call of Duty franchise.
“Protecting the public, and especially children, from online privacy invasions and dark patterns is a top priority for the commission,” Ms. Khan said in a statement on Monday about the Fortnite case. “These enforcement actions make clear to businesses that the F.T.C. is cracking down on these unlawful practices.”
Epic Games said in a statement that it has implemented numerous safeguards for children’s privacy and the security of in-game purchases over the years, and that “the practices referenced in the F.T.C.’s complaints are not how Fortnite operates.”
The company’s proposed settlements with the commission include record amounts in two separate cases, as well as new remedies.
Epic agreed to pay $275 million to settle allegations by a regulator that it violated a federal law, the Children’s Online Privacy Protection Act, by collecting personal information about children under 13 who played Fortnite without obtaining verifiable parental consent.
In addition, the company forced parents to “jump through hoops” to have their children’s data deleted and sometimes failed to comply with parents’ requests for deletion, according to a legal complaint filed Monday in the U.S. District Court for the Eastern District of North Carolina, where Epic is based.
The amount is far higher than the $170 million fine, the previous record for child privacy violations, that Google agreed to pay in 2019 over allegations that it illegally collected data about children on YouTube and used it to target ads.
Epic also agreed to pay $245 million in damages to consumers over allegations that it used manipulative online practices to trick players of all ages into making unintended purchases. Last year, the FTC announced that it intended to crack down on such “illegal shady schemes” that could manipulate consumers.
The amount exceeds previous recoveries in such cases, including a settlement last month in which Vonage, an Internet phone service provider, agreed to reimburse consumers $100 million over allegations that it used “dark schemes” to make it difficult to cancel its service.
In a separate complaint about “shady practices” by Epic Games, regulators said Fortnite’s user interface had a counterintuitive, inconsistent and confusing layout that led to users incurring costs with the click of a single button. Players could be charged when trying to activate a game from sleep mode or during a loading screen, the complaint said. The children ended up making withdrawals without their parents’ knowledge.
Despite a number of complaints from players, the company used manipulative tactics to keep consumers from canceling unauthorized payments or requesting refunds, the FTC said. These methods have resulted in hundreds of millions of dollars in unsolicited user payments, the agency believes.
In a statement, Epic said that in the rapidly evolving video game industry, longstanding industry standards are no longer sufficient to protect players.
“No developer creates a game with the intention of ending up here,” the company said 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.”