‘Fortnite’ video game developer paying $520M to resolve FTC allegations

Epic Games, the developer behind the hit video game “Fortnite,” will pay $520 million to the Federal Trade Commission (FTC) to resolve allegations the company violated child privacy protection laws and duped consumers into paying for products they didn’t ask for.

In a Monday release, the FTC said Epic Games will pay a $275 million financial penalty for violating the Children’s Online Privacy Protection Act and another $245 million for tricking players into paying for unwanted services and letting children “rack up” unauthorized charges without parental consent.

The $245 million settlement, which will be used to refund customers, is the largest refund in a gaming case and the largest administrative order in FTC history.

FTC Chair Lina Khan said “protecting the public, and especially children and teens, from online privacy invasions is a top priority for the Commission,” in a statement released Monday.

“This enforcement action makes clear to businesses that the FTC is cracking down on these unlawful practices,” Khan added.

The battle royale combat shooter “Fortnite,” which debuted in 2017, is free-to-play and is one of the most popular video games on consoles and gaming devices, with more than 400 million players worldwide.

Epic Games, which continues to update “Fortnite” and release new content for players, published a statement on Monday admitting that “no developer creates a game with the intention of ending up here.”

“The video game industry is a place of fast-moving innovation, where player expectations are high and new ideas are paramount. Statutes written decades ago don’t specify how gaming ecosystems should operate,” the statement reads. “The laws have not changed, but their application has evolved and long-standing industry practices are no longer enough.”

“We accepted this agreement because we want Epic to be at the forefront of consumer protection and provide the best experience for our players,” the company added.

The settlement for child privacy violations, the largest civil penalty awarded for such violations, will have to be approved by a U.S. District Court in North Carolina, where the Department of Justice filed a federal complaint on Monday with the FTC.

Federal authorities allege that Epic Games collected private information on children younger than 13 years old without parental consent and also accused the company of enabling real-time voice and text chat for children by default.

Along with the financial penalties, Epic Games will also adopt new default privacy settings, including turning off the default of real-time voice and text chat.

In the Monday statement, Epic Games said it created a new account for younger players that will allow them to play “Fortnite” while awaiting parental consent in a “tailored environment where certain features, such as chat and purchasing, are disabled.”

The unlawful billing charges are included in an administrative order against Epic Games and involve what the FTC calls “dark patterns,” or allowing customers to make unintended purchases.

The FTC says “Fortnite” players could make a purchase at the press of a button, including when waking the gaming console up from sleep mode — resulting in hundreds of millions of dollars in unauthorized charges over time.

Epic Games also ignored more than one million user complaints, the FTC charges, and made “obscure” changes that compounded the issue. Along with the settlement agreement to refund customers, Epic will be prohibited from charging customers without affirmative consent.

In its statement, Epic Games said the charges stemmed from a way to “simplify payment flows” through automatically saving payment information such as credit cards, but said it would now ask customers clearly if they wanted to save their financial information.

The company also said it would create a hold-to-purchase mechanism to affirm when a user wants to purchase content.