Data collection costs Epic Games half a billion USD

by Arthur · December 20, 2022

According to the FTC, the developer of Fortnite and Fall Guys, Epic Games, implemented design tricks called “dark patterns” and tricked millions of players into making unintended purchases.

The Federal Trade Commission (FTC) has announced that it will prosecute Epic games with a $520 million settlement regarding the alleged violation of the Children’s Online Privacy Protection Act (COPPA). A Canadian court has approved the class action against Epic Games.

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What was the problem?

FTC press release uncovered issues with the online purchase option. Although it is not certain that Epic Games intentionally created an addictive game, it cannot be ruled out that the game’s distributor and creator knew about its addiction.

Aside from online purchases made by minors, the FTC had expressed concerns about Epic’s direct text and voice communication features. These features were enabled by default, exposing minors to abuse and harassment.

Also, Epic Games had no mechanism to ensure that children and adults do not match each other when playing online. According to the FTC, children were exposed to bullying and threats, experienced psychological traumaand became vulnerable to suicidal thoughts.

Nice details

According to the FTC is Fortnite and the Fall Guys developer implemented design tricks called dark patterns and tricked millions of players into unintended purchases.

As for the $520 million fine, the payment will be divided into 2 settlements (PDF). It included the COPPA fine of $275 million – the largest penalty ever for violating an FTC rule, and $245 million will be paid to reimburse customers for the shady billing practices adopted by Epic Games.

Here it is worth mentioning that this is also the most important refund amount imposed by the FTC in a gambling case. The company has agreed to pay both fines.

For your information, a Canadian law firm decided to submit one class action (PDF) against the renowned game developer in 2019 for knowingly creating a highly “addictive game” Fortnite.

However, the case was extended as the court took time to decide whether they could proceed. It appears that the court has now agreed that the plaintiff’s claims are not “manifestly ill-founded”.

In August 2019, Epic Games, which is no stranger to lawsuits, was as well sued for hacked Fortnite accounts and for not protecting Fortnite accounts from hackers.

Epic Games Statement

In his official statementEpic Games said it accepted the deal because it wanted the company to encourage consumer protection.

“Statutes written decades ago do not specify how gaming ecosystems should work. The laws have not changed, but their application has evolved, and long-standing industry practice is 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 Games claims to have improved its payment flows and will offer a Yes or No option before saving payment data. The company will also allow an instant cancellation feature and self-service funds.

As for the controversial feature, Epic recently rolled out Cabined Accounts, allowing players to sign up with a date of birth, which will be vetted according to their country’s digital age of consent.

The gaming giant has also disabled chat and purchase functions. And each time a child registers, their parents will be notified via email so they can adjust their child’s settings. This feature is available for Fall Guys, Fortnite and Rocket League.