The US Federal Trade Commission has reached agreements with Epic Games that will see the videogame giant pay a total of $520 million in penalties and refunds, following allegations that the company violated the Children’s Online Privacy Protection Act (COPPA) and used dark patterns (UI design tricks meant to fool users) to dupe players into purchases.
There are two settlements. Epic will pay a $275 million penalty for violating the COPPA rule— the largest penalty ever levied for violating an FTC rule. As part of this agreement Epic will also adopt "strong privacy default settings for children and teens," meaning communications via voice and text will be turned off by default.
The second part of it is Epic paying $245 million to refund consumers affected by Fortnite's "dark patterns and billing practices", which is the largest refund amount the FTC has ever obtained in a videogame matter.
"As our complaints note, Epic used privacy-invasive default settings and deceptive interfaces that tricked Fortnite users, including teenagers and children," said FTC chair Lina M. Khan. "Protecting the public, and especially children, from online privacy invasions and dark patterns is a top priority for the Commission, and these enforcement actions make clear to businesses that the FTC is cracking down on these unlawful practices."
The FTC had filed two separate complaints against Epic in federal court, first alleging that Epic through Fortnite had violated the COPPA rule "by collecting personal information from children under 13 who played Fortnite, a child-directed online service, without notifying their parents or obtaining their parents’ verifiable consent". It further alleged a violation against the FTC Act's prohibition against unfair practices "by enabling real-time voice and text chat communications for children and teens by default".
The failure to notify parents and obtain consent seems to be the real biggie here, with the FTC saying Epic knew a huge part of Fortnite's audience was children and didn't take this seriously enough (I am obviously paraphrasing). It also says that Epic "required parents who requested that their children’s personal information be deleted jump through unreasonable hoops, and sometimes failed to honor such requests".
Which is exactly the kind of thing that really sets off a regulator's alarm bells. The FTC also says the default settings, alongside the game's nature of matching players with strangers, led to children and teens being "bullied, threatened, harassed, and exposed to dangerous and psychologically traumatizing issues such as suicide while on Fortnite".
Interestingly enough one of the key pieces of evidence for this was Epic's own concerns. As early as 2017 Epic employees were expressing concern internally about the makeup of the audience and default settings, per the FTC filing: "The company resisted turning off the default settings. And while it eventually added a button allowing users to turn voice chat off, Epic made it difficult for users to find".
The dark patterns side is all about whether Fortnite tricked players into making purchases. The FTC says it did thanks to a "counterintuitive, inconsistent, and confusing button configuration" whereby players could incur charges through the press of a single button, for example, to wake the game from sleep mode, or within a loading screen, or when trying to preview an item.
Part of this is also that until 2018 buying V-Bucks, Fortnite's in-game currency, had fewer checks on it, so once an account was linked up to a payment method kids could buy V-Bucks without their parents realising. Similar claims have been brought against other big tech companies in different contexts, most notably Apple and the App Store.
Wait, there's more. The FTC alleged Epic locked the accounts of customers who disputed such charges directly through their credit card companies, in turn locking them out of previously purchased content. Even when Epic agreed to unlock an account, apparently, users would be warned that they risked a permanent ban on the account if they disputed future charges. The company "ignored" over a million user complaints and internal warnings and, says the FTC, went on to "purposefully obscure cancel and refund features to make them more difficult to find."
The settlement accepted by the FTC will see Epic barred from blocking customers who dispute unauthorised charges, and prohibited from using dark patterns. Epic will also have to seek affirmative consent before charging users. The proposed agreement will be published in the Federal Register soon, open for public comment for 30 days, after which the commission will decide whether to make the order final.
(Only the headline and picture of this report may have been reworked by the LatestLaws staff; the rest of the content is auto-generated from a syndicated feed.)
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