Epic Games Settles FTC Allegations with $520 Million Payment

Epic Games Inc. has come to a settlement with the Federal Trade Commission, agreeing to pay $520 million in response to claims that the company behind the popular videogame "Fortnite" had violated online privacy regulations for minors and misled players into making unwanted purchases.

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The Federal Trade Commission (FTC) announced a two-part agreement that resolves two civil complaints against Epic. The first complaint, filed in federal court, claims that Epic violated the Children's Online Privacy Protection Act by collecting personal information from "Fortnite" players under the age of 13 without notifying their parents or obtaining verifiable parental consent. This agreement is said to be a record-breaking settlement.

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The lawsuit against the company alleged that they had enabled real-time voice and text chat communications for children and teens in the game without their consent. The FTC also claimed that this put these users in danger, as they were connected with strangers, leading to some being "bullied, threatened, harassed and exposed to dangerous and psychologically traumatizing issues such as suicide." The Federal Trade Commission (FTC) has announced that Epic will be paying a civil penalty of $275 million for alleged violations of the Children's Online Privacy Protection Act (COPPA). This is the largest penalty ever assessed by the FTC in its enforcement of the privacy law.

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Epic Games did not confirm or deny the FTC's claims as part of the settlements. When contacted for a statement, the company was not immediately available.
The FTC announced that the company had agreed to pay $245 million in consumer refunds to settle the second complaint, which was filed in administrative court. This is the largest settlement of its kind that prohibits the use of dark patterns, which are techniques that make it difficult for customers to cancel their purchases or services.
The agency accused Epic of using a range of strategies to encourage people to make unintended purchases of virtual items in "Fortnite," such as costumes and dance moves. These strategies included the use of buttons that were counterintuitive, inconsistent, and confusing. According to the agency, these tactics resulted in hundreds of millions of dollars in unauthorized charges for consumers.

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The Federal Trade Commission (FTC) accused Epic of deliberately making it hard to locate cancel and refund options. Additionally, the FTC claimed that Epic blocked the accounts of customers who contested unauthorized charges on their credit cards. Epic reportedly agreed to unlock an account, but warned consumers that any future disputes could result in a permanent ban. This is according to the Federal Trade Commission.

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In 2017, the shooter videogame "Fortnite" was released and quickly gained immense popularity, becoming a worldwide phenomenon. Epic, the company behind the game, was valued at around $32 billion in April. Sony Group Corp. and Tencent Holdings Ltd. from China are two of the investors in Epic.

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At the beginning of this month, Epic Games announced a new account type that is intended to create a secure and welcoming environment for gamers under the age of 13. Those who sign up for this account will not be able to access certain features, such as chat and purchasing, unless they receive permission from a parent or guardian.
The Federal Trade Commission (FTC) has announced that Epic Games must make a number of changes to “Fortnite” as part of the dual settlements. These changes are intended to protect users and address the issues raised in the FTC's complaints. Additionally, Epic Games must obtain regular, independent audits to ensure compliance.
The Federal Trade Commission (FTC) has established a website for consumers who feel they were wrongly charged for in-game purchases. However, the FTC has warned that it may take several months or longer to process these claims.

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The Federal Trade Commission (FTC) has been taking action against companies that make it difficult for consumers to get refunds for unintended purchases made through their websites or apps. Recently, Vonage, a subsidiary of Ericsson AB, was required to pay $100 million to settle FTC allegations that it had put up a number of barriers to prevent customers from cancelling their internet-based telephone service and charged them unexpected termination fees. This was the largest penalty the agency had imposed in a case involving dark patterns before the Epic case.

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In 2019, YouTube and TikTok were both accused of breaching the Children's Online Privacy Protection Act (COPPA). YouTube, a subsidiary of Alphabet Inc.'s Google, was fined a record-breaking $170 million penalty for the violation. This was the highest fine for a COPPA violation until the Epic settlement.