Epic Games to Pay $520 Million for Charges Associated With Children’s Privacy and Trickery: Federal regulators claimed that Epic Games, the developer of Fortnite and other popular games, violated children’s privacy and tricked millions of users into making in-app purchases they didn’t want.
The video game Fortnite became an instant phenomenon among millions of children and teenagers after its release by Epic Games five years ago. It didn’t take long to sign up, load the game, and start chatting with random people.
In addition, some kids ran up hundreds of dollars in charges on their parents’ credit cards by purchasing in-game digital items like fancy clothes for their characters. With over 400 million players, Fortnite has helped make Epic Games a billionaire thanks to in-game purchases and branded merchandise like action figures.
On Monday, the FTC filed a complaint against Epic Games alleging that the company illegally collected children’s personal information, endangered young players by pairing them with strangers on Fortnite while enabling live communications, and separately used manipulative techniques, called “dark patterns,” to trick millions of players into making unintentional purchases. Epic agreed to pay a record $520 million in fines and refunds to settle the F.T.C.’s accusations, a deal that puts the entire video game industry on notice.
The Federal Trade Commission took action in response to growing public worries about the potential negative effects of certain social media platforms and multiplayer video games on the mental health, safety, and privacy of children and teenagers. Let’s dig deep into Epic Games to Pay $520 Million for Charges Associated With Children’s Privacy and Trickery.
Today the FTC made clear that the predatory practices threatening young people online extend beyond social media. Congress must act now to put an end to this generation-defining mental health & privacy crisis. https://t.co/JEZ77oaFL9
— Ed Markey (@SenMarkey) December 19, 2022
This crackdown is further evidence that the agency is making good on its chair, Lina M. Khan, promise to regulate the technology sector more aggressively. An anti-trust lawsuit was filed earlier this month to prevent Microsoft’s $69 billion acquisition of Activision Blizzard, the company behind the popular Call of Duty franchise, in an effort to halt consolidation among video game makers.
According to a statement released by Ms Khan on Monday, the commission has made “protecting the public, and especially children, from online privacy invasions and dark patterns” a top priority in light of the Fortnite case. The F.T.C. is sending a clear message to businesses through these enforcement actions that it will not tolerate illegal behavior.
Epic Games issued a statement saying that “the practices referenced in the F.T.C.’s complaints are not how Fortnite operates” and that the company had implemented multiple safeguards over the years to protect the privacy and purchasing habits of children.
New legal remedies and record settlement amounts are part of the company’s proposed settlement agreements with the F.T.C.
To appease government agencies, Epic paid $275 million to resolve allegations that it broke the Children’s Online Privacy Protection Act by collecting data on users younger than 13 who were playing Fortnite without verifiable parental consent.
The government agency filed a complaint against Epic on Monday in the U.S. District Court for the Eastern District of North Carolina, where the company is headquartered, alleging that the company required parents to “jump through hoops” to have their children’s data deleted and sometimes failed to honor parents’ deletion requests.
Google agreed to pay a record $170 million in 2019 to settle claims that it illegally harvested data from children on YouTube and used it to target them with ads. This amount far exceeds the previous record for child privacy violations.
Authorities and legislators everywhere are ramping up their investigations into how social media and gaming giants like Facebook and Nintendo treat young users. A new law that went into effect in September in California mandates stricter default privacy settings for children and disables features that could put them at risk, such as precise location tracking.
In 2024, that law will go into effect. Last week, a trade group representing the technology industry filed a lawsuit against the state of California to prevent this from happening.
An identical law was passed in Britain a year before California passed its own. The British government began planning this initiative last year, around the same time that Google, YouTube, Instagram, TikTok, Snap, Epic Games, and other large platforms announced new protections for younger users everywhere.
The U.S. Congress is also working on legislation to make the internet safer for children.
Massachusetts Democrat Edward J. Markey proposed a bill last year that would extend the federal children’s online privacy law to cover ages 13 to 16. The senator and a number of children’s advocacy groups last week pushed for the inclusion of data-protection measures for minors in the year-end spending bill.
In a statement released on Monday, Mr. Markey praised the F.T.C. for taking action against Epic Games, saying, “An entire generation of young people is being targeted, tracked, and traumatized, as popular platforms rake in profits every day.” “Congress must step up and step in for the well-being of young people across America at this critical juncture in our nation’s history.”
The F.T.C. filed a complaint on Monday alleging that Epic’s default setting of live voice and text chats for Fortnite players of all ages, including children and teenagers, had caused “substantial” injury to the children involved.
The lawsuit claimed that minors had been “bullied, threatened, and harassed within Fortnite, including sexually,” and that some had even been exposed to traumatic topics like suicide and self-harm. An email from Epic Games’ director of user experience to company executives in 2017 requesting “basic toxicity prevention” for children playing Fortnite and asking them to disable voice chat is cited as evidence that Epic Games was aware of the potential for such harm, according to the complaint.
Regulators have stated that while Fortnite has added some relevant privacy and parental controls over the years, these updates “have not meaningfully alleviated these harms or empowered players to avoid them.”
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The F.T.C. has never before mandated such a remedy, but as part of the proposed settlement, Epic Games has agreed to implement high-privacy default settings for children and teenagers. The firm claimed it had already completed the action.
At the beginning of this month, Epic Games announced that it would be introducing “cabined accounts,” a new type of account for younger users that would restrict access to things like live chat and in-app purchases. The company announced that it would automatically place players under the age of 13, or the digital age of consent in their countries, into restricted accounts and require them to provide a parent’s email address before granting them access to features like live voice chats.
Players of all ages were duped into making purchases they didn’t intend to make, and Epic has agreed to refund them a total of $245 million. Last year, the F.T.C. made it known that it planned to take action against “illegal dark patterns” that have the potential to deceive consumers.
In a settlement, last month, Vonage, an internet phone service provider, agreed to refund $100 million to consumers over allegations that it used dark patterns to make it difficult for consumers to cancel service. This amount far exceeds any previous refunds in similar F.T.C. cases.
Regulators have filed a separate dark patterns complaint against Epic Games, alleging that the game’s user interface is counterintuitive, inconsistent, and confusing, causing players to accidentally rack up charges at the click of a single button. According to the complaint, players could be charged if they tried to wake the game from sleep mode or switch to a different screen while the game was still loading. Kids ended up running up with bills without their parents knowing about it.
Regulators allege that the company used deceptive practices to prevent customers from canceling unauthorized charges or requesting refunds, despite receiving numerous complaints from players and pleas from employees. According to the agency, users were fraudulently charged hundreds of millions of dollars using dark-pattern techniques.
Epic released a statement saying that traditional safety measures were inadequate in the modern, rapidly evolving video game industry.
“No developer creates a game with the intention of ending up here,” the firm said in a statement. We’re on board with this deal because we want Epic to be a leader in consumer safety and give our players the best possible experience.
Legislators in Britain had been advocating for stricter regulations on violent, online multiplayer video games for kids long before the F.T.C. took action on Monday. Members of the Digital, Culture, Media, and Sport Committee questioned video game company representatives at a 2019 parliamentary hearing on immersive and potentially addictive technologies about children signing up for accounts and racking up purchases without parental knowledge or consent.
“So there’s no initial age check at all?” During the hearing, Labour Party MP Ian C. Lucas raised concerns about new players of Fortnite.
“No. Epic Games VP of marketing, Matthew Weissinger, said, “We don’t collect that information.”
Last year, Epic Games implemented age verification for children in the United Kingdom, making it so that players under the age of 13 needed verified parental consent before they could play Fortnite.
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Frequently Asked Questions.
In what way did Epic Games break the rules that resulted in a monetary penalty?
Following a ruling in the United States, Epic Games has agreed to pay millions in fines. The developers of Fortnite were accused of illegally collecting data on minors without their parent’s knowledge or consent and of misleading players into making in-game purchases for real money.
Can you tell me the procedure for requesting a refund from Fortnite?
To view your purchased games, log in to your account, select the Account menu item from the top right of the store, then click the Transactions tab. In order to initiate a refund if the game is eligible for a self-service refund, please click the “Refund” button.
Where do I file a claim to receive compensation from the lawsuit against Epic Games?
The only way to receive cash payments or extra V-Bucks/Credits, or to make a claim for minor disaffirmation, is to submit a timely, valid Claim Form. If you need more information, check out the FAQ. As of April 26, 2021, the time limit for filing a claim had expired.
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