(CNN) — Epic Games, makers of the hit video game Fortnite, has agreed to pay a total of $520 million to resolve U.S. government allegations of tricking millions of gamers, including children and teenagers, into making unintentional purchases violate a landmark federal law protecting children’s privacy.
As part of the agreement, Epic will pay $275 million to the US government to resolve allegations that it violated the Children’s Online Privacy Protection Act (COPPA) by collecting the personal information of children under the age of 13, without first obtaining verifiable parental consent. It’s the largest fine the FTC has ever imposed on a rule it enforces, the agency said Monday.
In a second and separate settlement, Epic will pay $245 million in reimbursement to consumers allegedly harmed by user interface design decisions that the FTC claimed were misleading. This agreement is the largest administrative arrangement in FTC history, the FTC added.
In a blog post covering the twin agreements, Epic said the agreement reflects an evolution in how US laws apply to the video game industry.
“No developer makes a game with the intention of ending up here,” Epic said in the blog entry. “We accepted this agreement because we want Epic to be at the forefront of consumer protection and provide the best experience for our players.”
FTC Chairwoman Lina Khan said The comparison reflects the agency’s increased focus on privacy and so-called “dark patterns,” a term used to describe design elements intended to guide users toward a company’s preferred outcome.
“Protecting the public, and children in particular, from online privacy intrusions and dark patterns is a top priority for the Commission, and these enforcement actions give businesses a clear understanding that the FTC is taking action to stop these illegal practices,” Khan said in a statement.
The FTC’s child privacy complaint and proposed settlement have been filed in the US District Court for the Eastern District of North Carolina. In addition to allegedly illegally collecting children’s data, the FTC also alleged that Epic’s default settings for matchmaking and in-game communications exposed children to bullying and harassment.
The allegations of Epic’s misleading design decisions have been filed as an administrative complaint by the FTC. The complaint alleges that Epic made it extremely easy for children to purchase in-game items with a single click or keystroke without parental consent, leading to more than a million parental complaints to Epic about unwanted charges.
The FTC further claimed that Epic made it more difficult to cancel purchases of in-game items by burying the option at the bottom of the screen and requiring consumers to press and hold a button on their controller to cancel to complete. Those design decisions were reportedly implemented after surveys showed that accidental charges were the “top reason” when users clicked the button when the cancel button was more prominently displayed, the FTC said.
Epic’s agreement with the FTC, which is not yet final, prohibits the company from using dark patterns or charging consumers without their consent, and also prohibits Epic from suspending players from their accounts to respond to chargeback requests from users with credit card companies to respond which are unwanted charges. The Agreement has a term of 20 years from the date of its adoption.
In its blog post, Epic said it has agreed with the FTC to implement a feature that will explicitly ask Fortnite users if they want to save their payment information for future use. The feature is currently live, it added. The company also recently rolled out a more restricted version of “Fortnite” for younger players, allowing them to access some features while awaiting parental approval, but restricting chatting and purchases.
The FTC said that as part of its children’s privacy agreement, Epic may no longer enable text and voice chat by default for teen Fortnite players or those under the age of 13. The company must also put in place a comprehensive data protection program and the data it purportedly deletes collected in violation of COPPA.
“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 consistent with how Fortnite works,” Epic wrote. “We will continue to be open about what players can expect when making purchases, making sure cancellations and refunds are easy, and implementing safeguards that help keep our ecosystem safe and fun for viewers of all ages.”
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