The Federal Trade Commission has fined Epic Games $520M for collecting data from minors without the consent of their parents and raking in substantial profits from in-game purchases that users were misled into completing through confusing design configurations.
According to ABC News, Epic Games has been collecting data from children under thirteen, and automatically enabling chat features for children, including “real-time voice and text communications.” CNN reports that this is a violation of the Children’s Online Privacy Protection Act (COPPA), which was passed in 1998, and requires online actors to obtain parental consent before providing services and collecting data from users under thirteen years of age.
The fines for Epic Games’ privacy violations alone account for $275 million of the $520 million that Epic must pay. A further $245 million will be refunded to users who were duped by shady design tactics that led to millions of accidental in-game purchases. This $245 million will be the largest refund ever mandated by the FTC in relation to video games and online gaming.
The focus of the lawsuit was Epic’s highly popular game, Fortnite, which a cultural phenomenon among children and teens during the last few years. Fortnite is free to play, but it prompts users to spend real money during game play so they can upgrade and customize weaponry and player character attire.
According to CNN, FTC Chair Lina Khan claims that the lawsuit is part of the Federal Trade Commission’s commitment to addressing “dark pattens,” which are manipulative design choices made by companies like Epic Games to influence the behavior of consumers in their favor, typically against the consumer’s will. In the Fortnite games, these “dark patterns” were identified as elements such as the ease of accidentally purchasing items on the loading screen or by accidentally pressing the wrong button during an activity that did not originally include a transaction.
In a statement, Epic Games demurred on their role in misleading their users, claiming their mistakes were unintentional and that the video game industry is too fast paced for legislation to adequately encompass its many variables, requiring video game producers to expand on and correct “long-standing industry practices.”
ABC News also reports that there is a class-action lawsuit pending against Epic Games in Canada, where families are claiming that Fortnite was intentionally designed to ensnare children and teens in gaming addictions, leading to severe ramifications for their mental and physical well-being. The Canadian lawsuit also notes a lack of cautionary statements regarding the risk of this potential dependency.
Interestingly, Chinese tech giant Tencent purchased a 40% stake in Epic Games in 2012. In 2018, Tencent and Epic Games partnered to launch Fortnite on the Chinese market, but by 2021 Fortnite was closed off from Chinese users as the Chinese government raised concerns about the impact gaming had on Chinese youth. According to CNN, Fortnite had never been approved for release in China, and was only available as a beta version with limited features. The end of Fortnite in China came during a wave of CCP restrictions on when video games could be played during the school week and how children under 18 could gain access to games like Fortnite.
In 2021, the Committee on Foreign Investment in the United States held negotiations with Epic Games and Riot Games to articulate the terms of their operations in the US, given the substantial Chinese investments in their businesses. One of CFIUS’s main concerns was Epic and Riot’s data collection on US-based users, and whether that data could be compromised by the CCP.
