Fortnite maker Epic Games has to pay $520 million for spying on and tricking kids

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While his children played Fortnite, Fortnite played into consumer protection laws.

Epic Games, the creator of the wildly popular Fortnite series, is paying out two of the largest settlements in Federal Trade Commission (FTC) history for violations of children’s privacy and “dark employers” who intentionally misled consumers. users to make purchases through manipulative design.

The settlements, announced Monday, require Epic to pay a total of $520 million for the two consumer protection issues: $275 million for the privacy violations and $245 million for making it easier for consumers to accidentally purchase items that are too much for them. difficult to cancel or cancel them. refund those purchases. That money will be refunded to consumers; it is the largest refund amount in a gambling case, as well as the largest administrative order in FTC history. The $275 million penalty is the largest ever for violations of the Children’s Online Privacy Protection Act, or COPPA (the previous FTC record of $136 million). was upheld by Google over YouTube videos directed at children).

“Protecting the public, and especially children, from online invasions of privacy and dark patrons is one of the Commission’s top priorities, and these enforcement actions make it clear to companies that the FTC is taking action. crack down on these illegal practices,” FTC Chair Lina Khan said in a statement.

While the FTC is best known these days for its aggressive stance toward antitrust regulations under Chairman Khan, it also enforces consumer protection laws. These deals show that it is not letting that mandate lapse, nor is it afraid to go after industry leaders.

The FTC has been investigating dark patterns since before Khan got there, with then-acting chairwoman Rebecca Kelly Slaughter holding a dark patterns workshop in April 2021. Álvaro Bedoya, who was finally confirmed as agency commissioner in May after months of delays, he was a privacy advocate who has spoken out especially about children’s privacy before and after he came to the FTC.

COPPA requires companies to obtain consent from guardians of children under the age of 13 before their data can be collected online and to delete data from those children upon request. Although Epic knew the children were playing Fortnite, the FTC says, it did nothing to obtain their parents’ consent, nor did it adequately comply with data removal requests.

Epic is also accused of harming children by having text and voice chats turned on by default in Fortnite, subjecting them to bullying, harassment, and threats. Epic finally added a way to disable voice chat, but made that button hard to find.

Senator Ed Markey (D-MA), who was one of the authors of COPPA, was pleased with the FTC’s action, saying in a statement: “An entire generation of youth is being targeted, tracked and traumatized as the popular platforms make profit every day. The FTC made it clear today that the gauntlet of predatory practices that threaten youth extends well beyond social media.”

Markey has called for COPPA, which is more than 20 years old, to be updated to reflect the current internet economy and cover children 13 and older. COPPA remains the only national online consumer privacy law we have due to the inability of Congress to pass Anything else.

The second settlement concerns manipulation tactics that Epic knowingly used, according to the FTC, to trick its mostly young users out of hundreds of millions of dollars in accidental or unauthorized purchases, and then make it difficult for them to cancel or reimbursement for those purchases. The buttons were placed in locations that made it easy for people to accidentally touch them, while the cancel or refund buttons were intentionally made hard to find. Epic also did not obtain parental permission of underage users before allowing them to make purchases of the V-Bucks in-game currency of Fortnite.

Finally, the FTC alleges that Epic blocked customers’ accounts entirely if they disputed the charges, which meant they lost access to all of their purchases, not just the ones they disagreed with. Epic also threatened to permanently ban the accounts if users disputed the charges again. This had a chilling effect on disputes, as users did not want to risk losing their entire accounts and the thousands of dollars and hours of time they had invested in them.

In both cases, the FTC claims that Epic knew there were problems because its own employees raised concerns that Epic largely ignored. There were also more than 1 million consumer complaints about those unauthorized charges.

Epic Games said in a statement that the FTC’s complaints concerned past practices that were common in the gaming industry. Basically, he was just doing what everyone else was doing and he’s not doing those things anymore.

“The old status quo for in-game commerce and privacy has changed, and many developer practices need to be reconsidered,” the company said. “We want Epic to be at the forefront of consumer protection and provide the best experience for our players.”

The $275 million privacy fine goes to the government. The $245 million will be reimbursed to consumers. If you think that includes you, this FTC link has more information on what to do next.

While the $520 million it will have to pay for breaches in Fortnite is a record amount of money, Epic rakes in billions of dollars in revenue every year. Most of that comes from Fortnite.

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