Epic Games pays FTC $520mn to resolve ‘Fortnite’ claims

Epic Games will pay more than $500mn in a pair of settlements with the US Federal Trade Commission over claims that the Fortnite developer illegally collected data on children and manipulated millions of players into making unintentional purchases.

The payouts mark the biggest win yet by regulators tackling so-called “dark patterns” in apps and games, which trick users and players into making decisions that benefit the company, often at the individual’s expense.

In two separate legal complaints, the FTC accused Epic of failing to obtain parental consent from Fortnite players under the age of 13, in breach of US child protection laws, and of a “counterintuitive, inconsistent and confusing” layout to its in-game store of virtual items that “led players to incur unwanted charges based on the press of a single button”.

“As our complaints note, Epic used privacy-invasive default settings and deceptive interfaces that tricked Fortnite users, including teenagers and children,” said Lina Khan, FTC chair. “Protecting the public, and especially children, from online privacy invasions and dark patterns is a top priority for the commission.”

Epic did not admit wrongdoing as part of its settlements.

“We accepted this agreement because we want Epic to be at the forefront of consumer protection and provide the best experience for our players,” the company said. In a blog post, it suggested the issues on which it had been challenged by the FTC were also shared by other game developers.

“The old status quo for in-game commerce and privacy has changed, and many developer practices should be reconsidered,” Epic said. “We share the underlying principles of fairness, transparency and privacy that the FTC enforces, and the practices referenced in the FTC’s complaints are not how Fortnite operates.”

Fortnite, launched in 2017, is one of the world’s most popular online multiplayer games, with more than 400mn players. The game is available to play for free, but players can use its in-game currency, V-Bucks, to buy virtual items, from outfits to accessories and weapons, to personalise their characters.

Epic was valued at almost $30bn in a fundraising earlier this year led by Sony and the family investment group that owns most of Lego. It is working with Lego to develop an online world, or ‘metaverse’, for children and has also developed Fortnite-branded toys with companies such as Hasbro.

Tim Sweeney, Epic’s founder and chief executive, has been a leading critic of Apple’s App Store, and has sued the iPhone maker over its restrictions on alternative payment systems.

Alongside its settlement with the FTC, Epic made changes to its own payment systems, including requesting explicit consent from users to save their purchasing details and making it easier to obtain refunds. It has also recently changed how children can chat with other players in the game.

The FTC’s actions against Epic follow settlements with Apple and Google in 2014 over in-app purchases made by children. Regulators around the world are working to strengthen protections for children’s safety online, in games as well as on social media. In the UK, the forthcoming Online Safety Bill will require online platforms to take additional steps, such as verifying the age of their users, as part of efforts to prevent children from seeing harmful content.