In it, the FTC claims that Epic Games made a fortune by implementing predatory purchasing features and for its failure to comply with the regulations enacted by the Children’s Online Privacy Protection Act (COPPA). The federal agency has ordered Epic Games to pay a total of $245 million in refunds to Fortnite customers, for using predatory practices to deceive consumers into making unintentional purchases. According to the FTC, this figure represents the ”largest refund amount in a gaming case”, but they are not stopping there. The Department of Justice has settled with Epic Games on behalf of the FTC, in a separate proposed order in federal court. This will force Epic Games to pay out over $275 million in reparations to the US Treasury as a monetary penalty for its violation of COPPA regulations. This is also the largest penalty the FTC has handed out for violating their rules. So, what happened? In a nutshell, The FTC is accusing the multi-billion dollar company of carelessly profiting off of kids. This isn’t as shocking when you consider Epic Games only introduced an age verification system in 2019, long after they obtained empirical evidence that depicted a large number of Fortnite players being under the age of 13. To prevent and deter further exploitation of loopholes, the FTC has also ordered Epic Games to restructure Fornite’s default settings. According to the FTC report, Epic Games knew that a large majority of the Fornite player base were children under the age of 13, through customer surveys, marketing, licensing of Fortnite toys, and merchandise orders. And yet, they continued collecting their personal information without notifying or obtaining verifiable consent from their parents. On top of this, the company also forced parents who requested their children’s personal information to be deleted, to complete various tasks and often failed to honor those requests. Even more evidence was presented for Fortnite’s worrisome practices. The FTC claims that Epic Games broke rules from the FTC Act against unfair practices by enabling real-time voice and text chat communications for children and teens as default settings in their game. This exposed minors to dangerous and psychologically traumatizing issues like suicide, threats, harassment, and bullying by matching them with strangers in these communication channels. The report says that employees at the company voiced their concerns about this topic as early as 2017. The company was hesitant to include a button that would allow users to turn off voice chat, and once it was implemented, they made it hard to find according to the parent complaints the FTC received. The second matter, which includes the $245 million refund to customers, pertains to Fortnite’s predatory monetization policies and the lack of response from Epic Games. The report shows evidence that Epic Games ignored more than one million user complaints and repeated voicing of concerns by employees, in regard to wrongfully charging users. In fact, Epic Games actively contributed to the problem by purposefully making cancel and refund features obscure. The federal agency claims that the game’s user interface was shaped to incur unwanted charges with a single press on the screen. Players have been charged while on the loading screen, previewing items, and trying to wake the game from sleep mode. These predatory tactics resulted in hundreds of millions of dollars in unauthorized charges for consumers. What’s worse is Epic Games allowed these purchases of in-game currency and cosmetics to go through without the consent of a parental or cardholder until 2018. The reports of parents complaining about their kids racking up hundreds of dollars in credit card charges without consent have been around since the game existed. The final nail in the coffin is the allegations by the FTC that Epic Games locked out customers out of their accounts after they disputed these unauthorized charges. Even after unlocking accounts, Epic Games warned consumers it would permanently ban the accounts if any future charges were disputed, resulting in a loss of access to content worth thousands of dollars. Epic Games apologized for the situation in a blog post claiming “no developer creates a game with the intention of ending up here”. Yet, despite the best efforts from their PR team, their blog title tries to shift the blame, calling the situation a result of “long-lasting industry practices”. The rest of the gaming industry and big tech should probably learn a thing or two from this situation, as getting on the FTC’s bad side can be quite costly. The federal agency is currently suing to stop Microsoft’s acquisition of Activision Blizzard, claiming that making games like Call of Duty console exclusives would harm competition. Epic Games is giving away more than a dozen games for free this Christmas season.
