Epic Games Agrees To Pay $520 Million Settlement For Violating Child Gamers’ Privacy, Misleading Microtransactions

Video game developer Epic Games has agreed to a $520 million settlement to resolve Federal Trade Commission (FTC) accusations that its online shooter Fortnite violated privacy protections for children and used manipulative market practices to trick gamers into making unwanted purchases.

What is Epic accused of? The $520 million actually comes from two separate cases. The company will pay $275 million to settle accusations that it violated the Children’s Online Privacy Protection Act when it collected personal information from Fortnite players under the age of 13 that didn’t have verifiable consent from a parent or guardian. The company is also alleged to have enabled real-time voice chat by default, matching young players with strangers which led to bullying, threats, harassment, and exposure to dangerous and psychologically traumatizing issues. The accusation also claims that parents faced unreasonably difficult requirements to have their children’s data removed, and in some cases, Epic didn’t honor requests made by parents to have that data deleted.

And the other case? The other $245 million will be refunded to customers who were victimized by Epic’s alleged manipulative marketing practices which included counterintuitive, inconsistent, and confusing user interfaces that led gamers to make unwanted purchases. The FTC further accused Epic of intentionally obscuring purchase cancel and refund features to make them harder to access and use. In the complaint, the FTC says that Epic even threatened that users would be banned for life if they disputed any future charges with their credit card companies after requesting a refund.

That’s a lot of money! It sure is. Both totals are record penalties for their respective infractions. The previous record for violation of the Children’s Online Privacy Protection Act was paid by Google when the company ponied up $170 million in 2019 over accusations that it was illegally harvesting data children’s data from Youtube and then using it to target them with ads.

How can gamers get their refunds? The FTC has said it will provide updates on its website (at ftc.gov/fortnite) and send email notices to customers who believe they are eligible for a refund payment. Refunds will be available to:

• Parents whose children made an unauthorized credit card purchase in the Epic Games Store between January 2017 and November 2018
• Fortnite players who were charged in-game currency (V-Bucks) for unwanted in-game items (such as cosmetics, llamas, or battle passes) between January 2017 and September 2022
• Fortnite players whose accounts were locked between January 2017 and September 2022 after disputing unauthorized charges with their credit card companies

Is there more than money involved? In addition to the fines, Epic will be required to institute default high-privacy settings for kids and teenagers. Along with the new settings, Epic will have to turn off any existing setting that enable live text and voice chat with those groups of gamers.

So Epic admitted they were doing all of this? Not in so many words. But they also didn’t deny it. In a statement, the company said:

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. We accepted this agreement because we want Epic to be at the forefront of consumer protection and provide the best experience for our players.

Epic’s full statement can be found here.