Fortnite Fined $520M For Invading Privacy, Tricking Kids

Epic Games will pay a whopping $520 million combined settlement after an Federal Trade Commission investigation found it invaded children’s privacy and tricked some players into buying stuff in Fortnite that they didn’t want. The FTC announced on Monday that it’s the largest penalty ever assessed in the history of the regulatory agency. Epic Games wrote in response, “No developer creates a game with the intention of ending up here.”

So what did Epic Games do wrong exactly? The FTC accuses the billion-dollar game company of making tons of money off of kids without following the rules meant to protect them online. The first of two settlements announced on Monday is for collecting personal information from Fortnite players who are under 13, and in-game settings that turn on voice and text-chat by default. A violation of the Children’s Online Privacy Protection Rule, it’s resulted in a $275 million penalty and a commitment by Epic to change Fortnite’s default setting

The second settlement is for using “dark patterns to trick players into making unwanted purchases.” Specifically, Epic is accused of making it easy to accidentally buy skins when previewing them, and hard to find the refund option when players want to reverse the transaction. The FTC also says that when charges were reversed, Epic would sometimes ban those accounts, leaving players locked out of content they had previously paid for. As a result, Epic will pay $245 million into a fund to reimburse players affected by unintentional purchases.

I know what you’re thinking: this sounds like stuff every online game does, not just Fortnite. And sure enough, Epic Games wrote in a blog post today that it believes this is an inflection point for evolving regulatory standards around online gaming. “The old status quo for in-game commerce and privacy has changed, and many developer practices should be reconsidered,” the company wrote. “We share the underlying principles of fairness, transparency and privacy that the FTC enforces, and the practices referenced in the FTC’s complaints are not how Fortnite operates.”

Here’s a quick list of some of the tactics Epic says weren’t intentionally exploitative but that it will now change:

• Automatically saving payment data
• Single-button press purchases
• Disabling accounts that seek refunds for fraudulent purchases
• Lack of self-service refunds
• No spending limits for players under 13

These landmark settlements are another sign that the FTC isn’t afraid of picking fights with big tech, especially on the gaming side. The commission is currently suing to block Microsoft’s $69 billion takeover of Activision Blizzard, claiming that the Xbox maker’s ability to make games like Call of Duty console exclusives in the future could harm competition. In response, Microsoft has promised everything under the sun to try to make the FTC go away, from putting Call of Duty on Game Pass’s rival service PS Plus, to lettings its workers unionize without a fight

These are big mistakes Epic Games can afford to make. Fortnite made $9 billion in revenue in its first two years alone. But it should probably be a wake-up call to other game companies to start taking these rules more seriously as well. It’s been a joke for years that online gaming is rife with kids hurling slurs into voice chat, and parents angry about credit card bills for FIFA packs and Fortnite dances. According to the FTC, that was both true and a violation of the law. We’ll see how much that changes things following this settlement.