Fortnite maker Epic settles record-breaking microtransaction dispute

Fortnite creator Epic Games will pay a record-breaking amount to the FTC over microtransactions and child-protection disputes in the battle royale game

Fortnite maker Epic settles record-breaking microtransaction dispute. A character from Epic Games battle royale game Fortnite

Fortnite, Gears of War, and Unreal Engine developer Epic Games has paid a record-breaking settlement to the Federal Trade Commission (FTC) as it resolves complaints connected to microtransactions and child-protection guidelines in the immensely popular battle royale game.

In total, Epic will pay $520 million USD (£426 million GBP) to resolve two separate complaints, one a court order from the Department of Justice, issued regarding  a claim that the developer breached the Children’s Online Privacy Protection Act (COPPA), and the other an administrative order relating to “dark patterns” which the FTC says were used to “dupe millions of players into making unintentional purchases.”

“Epic will pay $245 million to refund consumers for its dark patterns and billing practices,” the Commission explains, “which is the FTC’s largest refund amount in a gaming case, and its largest administrative order in history. The company has deployed a variety of dark patterns aimed at getting consumers of all ages to make unintended in-game purchases.

“Fortnite’s counterintuitive, inconsistent, and confusing button configuration led players to incur unwanted charges based on the press of a single button. For example, players could be charged while attempting to wake the game from sleep mode, while the game was in a loading screen, or by pressing an adjacent button while attempting simply to preview an item. These tactics led to hundreds of millions of dollars in unauthorised charges for consumers.”

The administrative order related to “dark patterns” will “prohibit” Epic from “charging consumers without obtaining their affirmative consent.” The $245 million paid by Epic will be used to offer refunds to customers. In its ruling, the FTC also accuses Epic of blocking the Fortnite accounts of customers who made refund requests in the past.

“The FTC alleged that Epic locked the accounts of customers who disputed unauthorised charges with their credit card companies,” the Commission says. “Consumers whose accounts have been locked lose access to all the content they have purchased, which can total thousands of dollars. Even when Epic agreed to unlock an account, consumers were warned that they could be banned for life if they disputed any future charges.”

In a separate ruling, Epic will pay a $275 million penalty for violating the COPPA Rule – the largest penalty ever obtained for violation of an FTC regulation. The Commission says that Fortnite’s default in-game privacy settings”put children and teens at risk,” and that Epic collected personal information from players who were under 13 years of age.

“Epic’s settings enable live on-by-default text and voice communications for users,” the FTC says. “The FTC alleges that these default settings, along with Epic’s role in matching children and teens with strangers to play Fortnite together, harmed children and teens. Children and teens have been bullied, threatened, harassed, and exposed to dangerous and psychologically traumatising issues such as suicide while on Fortnite.

“Epic was aware that many children were playing Fortnite — as shown through surveys of Fortnite users, the licensing and marketing of Fortnite toys and merchandise, player support and other company communications — and collected personal data from children without first obtaining parents’ verifiable consent. The company also required parents who requested that their children’s personal information be deleted to jump through unreasonable hoops, and sometimes failed to honour such requests.”

As well as deleting the information gathered in violation of COPPA rules, Epic is ordered by the FTC to create a new privacy program addressing the Commission’s issues, and submit to regular, independent audits. The FTC says it will publish the new consent agreement in the Federal Register “soon.”

In response to the FTC settlement, Epic has issued its own statement outlining its existing and updated privacy and payments, and urging other game developers to “rethink” their own practices.