FILE- In this Oct. 6, 2018, file photo Henry Hailey, 10, plays one of the online “Fortnite” game in the early morning hours in the basement of his Chicago home. (AP Photo/Martha Irvine, File)

Fortnite creator Epic Games to pay record FTC fine over violating children’s privacy

As part of its agreement, Epic must adopt stricter privacy settings for minors

Epic Games, the creator of the popular video game Fortnite, has agreed to pay $520 million to the Federal Trade Commission over complaints that the company violated children’s privacy law and forced unintended purchases through trickery.

The settlement, which the FTC announced Monday, is divided into two complaints.

Epic, based in Cary, North Carolina, has agreed to pay $275 million for violating the Children’s Online Privacy Protection Act (COPPA) when it used “privacy-invasive default settings and deceptive interfaces that tricked Fortnite users, including teenagers and children,” FTC Chair Lina M. Khan said in a statement. This is the largest amount the FTC has ever collected for a COPPA violation.

As part of its agreement, Epic must adopt stricter privacy settings for minors, including turning off text and voice communications as default settings.

Epic has also agreed to pay the FTC $245 million for what the government described as “dark patterns to trick players into making unwanted purchases and let children rack up unauthorized charges without any parental involvement.” The FTC will use this money to provide refunds to Fortnite consumers impacted by Epic’s practices.

According to the FTC, Epic maintained a design the incurred players to be “wrongfully charged” even after concerns were raised by more than a million users and many employees.

Epic released Fortnite in 2017, and the game rapidly ascended in popularity. Following a major investment from Sony last April, the privately-held Epic was valued around $32 billion. Its founder and CEO Tim Sweeney is ranked as the wealthiest person in North Carolina.

In a statement following the FTC announcement, Epic Games spokesperson Candela Montero said the company “accepted this agreement because we want Epic to be at the forefront of consumer protection and provide the best experience for our players.”

“No developer creates a game with the intention of ending up here,” Montero said. “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.”

RELATED: CEO Zuckerberg apologizes for Facebook’s privacy failures

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