Over the last month and just ahead of Christmas 2022, Epic Games was reportedly forced to pay a settlement to the United States Federal Trade Commission. The settlement totaled a supposed $520 million to both the FTC and customers. The reason? The FTC believes Epic Games may have knowingly engaged in business practices meant to trick children and teens into uninformed purchases in relation to games like Fortnite. Not only does the settlement call for a fine from the FTC, but also reimbursement to customers supposedly duped by these practices.
The FTC posted the details of this settlement with Epic Games in a press release on its website on December 19, 2022.
“As our complaints note, Epic used privacy-invasive default settings and deceptive interfaces that tricked Fortnite users, including teenagers and children," FTC Chair Lina M. Khan said of the matter. "Protecting the public, and especially children, from online privacy invasions and dark patterns is a top priority for the Commission, and these enforcement actions make clear to businesses that the FTC is cracking down on these unlawful practices.”
According to the press release, Epic Games will pay a $275 million monetary penalty to the FTC for violating the Children’s Online Privacy Protection Act (COPPA), which will be the single largest amount ever fined for the rule. Epic Games is then expected to refund $245 million to affected customers for its “dark patterns and billing practices.” This is also record-breaking, as it is the largest refund ever ordered by the FTC in a gaming case. In addition, Epic Games will be expected to remove these business systems from its games and employ default systems that provide extra privacy to younger gamers, such as having voice chat and communication disabled by default.
“The Justice Department takes very seriously its mission to protect consumers’ data privacy rights,” said Associate Attorney General Vanita Gupta. “This proposed order sends a message to all online providers that collecting children’s personal information without parental consent will not be tolerated.”
Given Fortnite’s continued prominence in the gaming space, it would seem Epic Games is coming into the new year with some baggage, and this as it attempts to appeal its lawsuit with Apple and deal with a countersuit from Google left over from 2022. Stay tuned as we continue to follow for any further updates or details from the FTC settlement.