Games publisher Epic Games has filed a dispute with the Federal Trade Commission (FTC) over paying $520M / $428.4M in fines.
Epic Games, developers of Online Battle Royale Fourteen days, will pay a $275m / £225.8m / AU$411.9m fine for violating COPPA practices and a further $245m / 201.3m £/AU$366.9m to be distributed as refunds. This is the “highest penalty ever imposed for violating an FTC rule,” according to the US regulator official statement (opens in new tab). In addition to the fines, the FTC requires Epic Games to “adopt strong privacy defaults for children and young people and ensure that voice and text communications are disabled by default.”
“We accepted this agreement because we want Epic to be at the forefront of consumer protection and provide the best experience for our players,” Epic said a statement (opens in new tab). “Over the last few years we’ve made changes to ensure our ecosystem meets the expectations of our stakeholders and regulators, which will hopefully be a helpful guide for others in our industry.”
Epic signed a settlement with the FTC covering their concerns about Fortnite item shop features, refunds, and parental permissions. Here are details on how we’ve evolved Fortnite since 2017, as well as thoughts for all game developers to consider. https://t.co/mb4w3NHas3December 19, 2022
The fine print
The lump sum is being collected by the FTC from Epic Games to settle their dispute with the US Department of Justice. It serves as redress for two separate code breaches: one related to data breaches and the other to the “illegal dark patterns” of Epic Games’ business model itself.
The FTC’s complaint against Epic’s “dark patterns” is threefold; First, that it uses these patterns and business models to “entice users into making purchases,” second, that it “charges account holders without authorization,” and third, that it withholds and refuses to sell pre-purchased content to refund.
Epic Games has violated COPPA by retaining user information without obtaining parental consent, and the FTC says Fortnite’s default privacy settings put children and teens at risk.
“Epic used privacy-invading default settings and deceptive interfaces that tricked Fortnite users,” FTC Chairwoman Lina M. Khan said in the commission’s statement
According to the FTC, these patterns included how “players could be stressed when attempting to wake the game from sleep mode while the game was in a loading screen, or by pressing an adjacent button when attempting to simply preview an item.”
Until 2018, in-game purchases could be made without verification from account holders. “Epic allowed children to purchase V-Bucks by simply pressing buttons, without requiring any action or consent from parents or the cardholder,” says the FTC, with parents complaining that their children made the purchases and did not their approval would have accumulated high bills.
In addition to these instances of unauthorized purchases, the FTC says that “Epic has suspended the accounts of customers who have disputed unauthorized charges with their credit card companies.” This would effectively cut users off from the content they purchased, monitored or not, which could mean thousands of dollars lost, and users with accounts restored by Epic reportedly received warnings that their accounts would be lost forever if they would make further attempts at refunding purchases
“This proposed order sends a message to all online providers that collecting personal information from children without parental consent will not be tolerated,” Assistant Attorney General Vanita Gupta said in an FTC statement.
Epic Games responds
Epic says in its statement that storing payment details is a “common way to streamline the checkout process” but that it has “agreed with the FTC to change this practice and [it] offer now[s] an explicit yes or no choice to store payment information.”
Regarding allegations that accounts have been suspended for reversing unauthorized payments, Epic Games has “updated [its] Chargeback policy to consider non-fraud scenarios and only deactivates accounts where fraud indicators are present.”
Regarding child vulnerability, Epic Games reiterates that “Fortnite is classified as a teenager and is aimed at an older teenage and college-age audience.” It also references the recent launch of Cabined Accounts, described as “a new breed of Epic account that offers a tailored experience that’s safe and inclusive for younger players.” This would allow players under the age of 13 to play Fortnite “in a customized environment where certain features such as chat and purchase are disabled” until their account receives parental consent.
Epic concludes its statement by saying that it shares the same values as the FTC on child protection and transparency of in-game purchases. “We share the underlying principles of fairness, transparency and privacy enforced by the FTC, and the practices referenced in the FTC’s complaints are not consistent with the way Fortnite operates.”
https://www.techradar.com/news/fortnite-developer-to-pay-record-sum-in-fines-and-refunds-to-players Fortnite developer pays record amount of fines and refunds to players