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‘Fortnite’ maker to pay $520 million in privacy and refund settlement with FTC

The FTC said it has secured the largest-ever penalty for violations of one of its rules.

(CN) — Epic Games Inc., the maker of the hugely popular "Fortnite" online video game, has agreed to pay $520 million to settle Federal Trade Commission claims that it violated the Children’s Online Privacy Protection Act and deployed design tricks to dupe millions of players into making unintentional purchases.

Epic will pay a $275 million penalty for violating the prohibition on collecting personal information from children under 13 who played Fortnite without notifying their parents or obtaining their parents’ verifiable consent, the FTC said Monday. It is the largest penalty ever for violating an FTC rule, according to the commission.

Separately, Epic will pay $245 million to refund consumers for its so-called dark patterns and billing practices through what the FTC called a counterintuitive, inconsistent, and confusing button configuration that led players to incur unwanted charges based on the press of a single button. It's the largest refund secured by the FTC in a gaming case.

"As our complaints note, Epic 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. "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.”

Fortnite, which is played by more than 400 million people around the world, is generally free to download and play but users pay for in-game items such as costumes and dance moves. Fortnite Battle Royale is the most popular version of the game and has become a cultural phenomenon since its release in 2017, generating billions of dollars in revenue for Epic.

The company said it has accepted the settlement because it wants to be at the forefront of consumer protection and provide the best experience for its players

"No developer creates a game with the intention of ending up here," Epic Games said in a statement posted on its website. "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."

Among the FTC's allegations is that Fortnite's settings enabled live on-by-default text and voice communications for users. These default settings, according to the FTC, 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 traumatizing issues such as suicide while on Fortnite," the FTC said.

Epic Games said in its statement that high privacy default settings for players under the age of 18 went live this past September. Per these changes, chat defaults to “Nobody," profile details default to "Hidden," parties default to “Invite Only," and personalized recommendations are defaulted "Off," Epic said. In addition, players under 16 also have the mature language filter defaulted "On" for text chat, according to the company.

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