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Epic Games Fined $520m By The FTC

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Epic Games Fined $520m By The FTC

(CTN News) – The US Federal Trade Commission has hit Fortnite maker Epic Games with a record-breaking penalty of $520m (£427m) over allegations it previously used “lax privacy practices” for voice and text chat, and used design tricks to “dupe millions of players” into unintentional purchases.

The judgment represents the largest-ever settlement obtained by the FTC regarding the US Children’s Online Privacy Protection Act, since Fortnite enabled default in-game chat and user data collection.

While the US ratings board ESRB rates Fortnite as a “Teen” game, the Federal Trade Commission argues Epic Games knew its users were likely under 13 years old and had not sought parental consent.

Lastly, the FTC fined Fortnite for using “illegal dark patterns” that “tricked players into making unwanted purchases and allowed children to rack up unauthorised charges without their parents’ knowledge”.

Fortnite applied “counterintuitive, inconsistent and confusing button configurations” that allowed users to purchase things accidentally, according to the FTC.

Before 2018, it was too easy for children to purchase in-game currency without parental consent, the FTC said. A second criticism was Epic Games’ locking of accounts for customers who subsequently charged back purchases – some worth thousands of dollars – with their credit cards.

In a detailed response to the settlement, Epic Games explains how Fortnite has evolved over the years and how it believes the FTC has used “statutes written decades ago” to target “long-standing industry practices” that it now agrees “are no longer sufficient.”

As a result of this agreement, Epic Games is able to provide the highest quality player experience to its players and remain at the forefront of consumer protection.

As a result of our efforts over the past few years, we’ve been making changes to ensure our ecosystem meets the expectations of our players and regulators, which we hope will be helpful to others in our industry.”

The statement from Epic Games highlights the changes it has made to address the FTC’s concerns, including a refund token system (added in May 2018) and a more recent undo purchase system.

Even more recently, you are required to hold a button to make a purchase to confirm your intention.

Epic responded to the FTC’s concerns about child privacy by launching Cabined Accounts – an Epic Account that prohibits certain features like chat and purchasing for children under 13.

In Epic Games’ words, “No developer creates a game knowing it will end up here.” The video game industry is a place of fast-moving innovation, where player expectations are high and creative ideas are crucial.”

The laws of decades ago don’t specify how gaming ecosystems ought to function. They haven’t changed, but their application has evolved, and long-standing industry practices are no longer sufficient.

The old status quo for in-game commerce and privacy has changed, and many developer practices need to be reconsidered.

Epic Games concluded that the practices referenced in the complaints are not how Fortnite operates. We share the same principles of fairness, transparency, and privacy that the FTC enforces.

We will continue to ensure that players know what to expect when making purchases, make cancellations and refunds as easy as possible, and build safeguards to keep our ecosystem safe and fun for everyone.”

Who invested in Epic Games?

Epic Games is funded by 38 investors. Sony and KIRKBI A/S are the most recent investors.

Investors.
Investor Name Sony
Lead Investor
Funding Round Venture Round – Epic Games
Partners Kenichiro Yoshida

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