Epic Games, owner of the massively popular online game Fortnite will pay two separate settlements, totaling $520 million for violating a federal act related to online protections for kids. This is the largest FTC administrative settlement ever.
FTC Chair Lina M. Khan stated in a press release that “Epic used privacy-invasive default settings and deceptive interfaces that tricked Fortnite users, including teenagers and children.”
Epic will pay a $275 million civil penalty for alleged violations of the Children’s Online Privacy Protection Act (COPPA). The company will turn over an additional $245 million for allegedly using dark patterns to dupe millions of Fortnite players into making unintentional purchases.The $245 million settlement will be used for customer refunds to those who fell victim to those deceptive sales techniques.
COPPA covers operators of child-directed sites and online services – a determination made by evaluating the subject matter, visual content, use of animated characters or child-oriented activities and incentives, and other factors – and operators of sites and online services who have actual knowledge they’re collecting or maintaining personal information from a child under 13. If a company is covered by COPPA, it must (among other things) get verifiable parental consent before collecting, using, or disclosing personal information from children under 13.
According to the FTC, a substantial number of the 400 million people who play Fortnite are kids under 13, and through its registration process, Epic collected kids’ personal information – including their full names, email addresses, and usernames – without getting their parents’ consent. The complaint cites a number of factors to establish that Fortnite is a “child-directed” service.
The FTC alleges that Epic launched Fortnite with no parental controls and minimal privacy settings. Instead, the company included one paragraph toward the end of a lengthy Privacy Policy, disavowing that it was kid-directed. In designing Fortnite to match users to play the game together, Epic set it up by default that players could engage in direct, real-time voice chat with other players. Given the number of Fortnite players who were young kids or teenagers, the inevitable result was that children and teens were often matched with strangers.
North Carolina-based Epic Games had a valuation of about $31.5 billion as of April 2022.
