Epic Reaches $520M Fortnite Settlement Over Microtransactions And Child Privacy Dispute

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Epic has reached a settlement with the Federal Trade Commission (FTC) over allegations of privacy violations and unwanted charges. The company will pay a total of $520 million in relief over the allegations.

Many children and adults alike have become enthralled with the highly-popular Fortnite video game from Epic Games. The FTC took notice of both the spending and the privacy-invasive settings and deceptive interfaces that "tricked Fortnite users, including teenagers and children," and filed a complaint against Epic. The filing resulted in Epic agreeing to pay $275 million for violating children's privacy law, change default privacy settings, and an additional $245 million in refunds for tricking users into making unwanted charges.

"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."

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The filing included an allegation that Epic violated the COPPA Rule by collecting personal information from children under 13 who played Fortnite, without the parent's consent or knowledge. It also stated that the gaming company violated the FTC Act's prohibition against unfair practices by enabling real-time voice and text chat communications for children and teens by default.

"The Justice Department takes very seriously its mission to protect consumer's data privacy rights," remarked 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."

In an online response to the agreement, Epic stated, "No developer creates a game with the intention of ending up here. The video game industry is a place of fast-moving innovation, where player expectations are high and new ideas are paramount. Statutes written decades ago don't specify how gaming ecosystems should operate. The laws have not changed, but their application has evolved and long-standing industry practices are no longer enough." Epic went on to say it accepted the agreement because it wants to be at the forefront of consumer protection and provide the best experience for its players.

The FTC stated it will release a description of the consent agreement package in the Federal Register soon. As for Epic, it shared a long list of improvements in its online response saying it has made improvements to the game to the refund experience, as well as enhancements that protect the privacy of children and teens.