Epic Games to Settle FTC Charges with $520 Million Payment

Epic Games, the creator and distributor of the popular video game Fornite, has agreed to pay a hefty sum of $520 million to the Federal Trade Commission (FTC) in order to settle charges of violating the Children's Online Privacy Protection Act (COPPA).

The Federal Trade Commission (FTC) accused Epic of connecting minors with strangers, exposing them to potentially hazardous and emotionally distressing topics, and not providing sufficient parental control measures.

The Federal Trade Commission (FTC) Chair Lina Khan has stated that safeguarding the public, particularly children, from online privacy violations and dark patterns is a major concern for the Commission. These enforcement actions demonstrate to businesses that the FTC is taking a firm stance against these illegal practices.

Epic Games has been ordered to pay two separate fines, one of $245 million for issues with Fortnite's in-game store and refund systems, and another of $275 million to address child privacy concerns.

The Federal Trade Commission (FTC) argued that Epic Games had taken deliberate steps to attract children, such as incorporating music, celebrity endorsements, and branded merchandise into the game. This included collaborations with Travis Scott, Ariana Grande, and a wide range of Fortnite-related products.

The FTC declared that Epic had not taken sufficient action to rectify their violations of COPPA. They described Epic's attempts to address the harassment issue as "weak-willed" and noted that it took two years after the game's launch for them to introduce parental controls.

The FTC has cited internal reports from Epic that suggest the company was aware of the potential for negative social behavior due to certain features, such as voice chat, yet failed to take action to protect children and comply with federal regulations.

The FTC complaint stated that children have been subjected to bullying, intimidation, and sexual harassment while playing Fortnite.

The Federal Trade Commission's (FTC) settlement is substantial, yet it is not even close to the $5 billion penalty that Meta, formerly known as Facebook, was mandated to pay in 2019.

Despite this, it is a significant penalty for a business that earned $5.5 billion in profits between 2018 and 2019, as reported in court documents seen by The Verge.

The FTC complaint highlighted that in order for parental controls to be effective, parents would need to be aware of their existence. It wasn't until 2019, after Epic had already gathered evidence that a large number of Fortnite players were under the age of 13, that an age verification system was put in place.

Epic has agreed to this agreement in order to ensure that they are providing the best experience for their players and are at the forefront of consumer protection. Although the laws have not changed, the way they are applied has shifted and traditional industry practices are no longer sufficient. In a statement, Epic expressed their commitment to this goal.