Epic Games to pay over $500m in Fortnite refunds & privacy violation penalty after FTC fine

Fortnite creator Epic Games has agreed to pay $520m to settle the Federal Trade Commission’s allegations that it had violated a children’s privacy law and used certain tricks to get millions of players to make unintentional purchases.

The FTC’s action against Epic Games involves two separate record-breaking settlements. As part of a proposed federal court order filed by the Department of Justice, Epic will pay a $275 million monetary penalty for violating the COPPA Rule — the largest penalty ever obtained for violating an FTC rule, according to the Commission.

Additionally, Epic will be required to adopt strong privacy default settings for children and teens, ensuring that voice and text communications are turned off by default, in a first-of-its-kind ruling. As noted in Epic’s newsroom post, Fortnite settings default to the highest privacy option for players under the age of 18, including voice and text chat defaulting to “Nobody.”

Under a separate order, Epic will pay $245 million to refund consumers for its billing practices. This is the FTC’s largest refund amount in a gaming case and its largest administrative order in history.

“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 Justice Department takes very seriously its mission to protect consumers’ data privacy rights,” said Associate Attorney General Vanita Gupta. “This proposed order sends a message to all online providers that collecting children’s personal information without parental consent will not be tolerated.”

According to the order, Fortnite used illegal “dark patterns” to trick players into making unwanted purchases and let children rack up unauthorized charges without any parental involvement. The Commission voted 4-0 to issue the proposed administrative complaint.