FTC Fines Epic Games $520 Million For Violating Child Privacy Laws

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The Federal Trade Commission (FTC) announced today that it has reached an agreement with Epic Games to pay fines totaling $520 million. According to the FTC, Epic incurred this penalty by violating the Children's Online Privacy Protection Act (COPPA) within Fortnite. Specifically, he alleged that Epic used invasive default settings to trick young players into making unintentional purchases.

Among the fines, $275 million is a monetary penalty Epic must pay for violating COPPA. This is the largest such penalty anyone has paid to the FTC. Epic must also issue $245 million in refunds to consumers for "its dark schemes and billing practices" (in FTC terms). It also sets a record as the largest refund ordered by the FTC.

In the FTC decision, it is stated that Epic did not obtain verifiable parental consent, even though it knew children were playing Fortnite. It was also difficult for parents to ask Epic to delete their children's data. Epic Game's default settings when the complaint was filed also had text and voice chat features enabled, unless users specifically disabled them. This left the children playing the game vulnerable, especially when paired with strangers who bullied, harassed and threatened them.

The FTC also claims that Epic used "dark patterns" and confusing user interfaces to trick players into making unintended purchases. It also charged unauthorized account holders (i.e. parents whose children racked up credit card charges without their consent) and blocked the accounts of users who disputed charges.

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In addition to the fines, the FTC has proposed an order prohibiting Epic from enabling voice and text chat for children and teens without parental consent. Another order prohibits the publisher from using the aforementioned "dark models" to enable unauthorized purchases.

Epic Games responded to the decision in a blog post, saying, "The laws haven't changed, but their application has evolved and long-standing industry practices are no longer sufficient. We have accepted this agreement because we want Epic to be at the forefront of consumer protection and provide the best experience for our players. Over the past few years, we have made changes to ensure that our ecosystem meets the expectations of our stakeholders and regulators, which we hope will be a useful guide for others in our industry.”

Epic has listed all the changes made to Fortnite since the game went live, which will prevent the issues it is paying the fines for. He points to its recent implementation of cabin accounts, essentially protected accounts for young players, as well as less invasive default settings. It adds that it no longer participates in "obscure practices" such as saving default payment information.

Epic Games is also currently engaged in a legal battle with Apple over how the latter allocates costs in its App Store. Apple also paid FTC fines in 2014 for allowing children to make purchases without parental consent.

FTC Chairman Lina M. Khan said in a statement, "Protecting the public, and especially children, from online privacy breaches and dark patterns is a top priority for the Commission, and these enforcement actions make it clear to businesses that the FTC is...