Fortnite maker to pay $520m for privacy and e-commerce abuses

The maker of the popular Fortnite video game will pay $520 million in penalties and refunds to settle complaints about children's privacy and payment methods that tricked players into unintended purchases, US federal regulators said on Monday.

The Federal Trade Commission reached the settlements to resolve two cases against Epic Games, which has used Fortnite's success in the past five years to become a video game powerhouse.

The $520 million covered in the settlement consists of $245 million in customer refunds and a $275 million fine for collecting personal information on Fortnite players under the age of 13 without informing their parents or getting their consent.

It is the biggest penalty imposed for breaking an FTC rule. “Epic used privacy-invasive default settings and deceptive interfaces that tricked Fortnite users, including teenagers and children,” FTC chairwoman Lina Khan said.

Even before the settlement was announced, Epic said it had introduced changes "to ensure our ecosystem meets the expectations of our players and regulators, which we hope will be a helpful guide for others in our industry".

The company, in Cary, North Carolina, asserted that it no longer engages in the practices flagged by the FTC.

The $245 million in customer refunds will go to victims of “dark patterns" and billing practices. Dark patterns are deceptive online techniques used to nudge users into doing things they did not intend to do. “Fortnite’s counter-intuitive, inconsistent and confusing button configuration led players to incur unwanted charges based on the press of a single button," the FTC said.

Players could, for example, be charged while trying to wake the game from sleep mode, while the game was in a loading screen, or by pressing a nearby button when trying to preview an item, it said. “These tactics led to hundreds of millions of dollars in unauthorised charges for consumers," the FTC said.

Epic said it agreed to the FTC settlement because it wanted “to be at the forefront of consumer protection and provide the best experience for our players".

“No developer creates a game with the intention of ending up here,” the company said.

During the past two years, Epic also has been locked in a high-profile legal battle with Apple to try to dismantle the barriers protecting the iPhone app store, which has emerged as one of the world’s biggest e-commerce centres during the past 14 years.

After Epic introduced a different payment system in its Fortnite app in August 2020, Apple removed the video from the store, leading to a lawsuit that went to trial last year.

A federal judge ruled largely in Apple's favour, partly because she embraced the iPhone maker's contention that its exclusive control of the app store helped to protect the security and privacy of consumers. The ruling is under appeal, with a decision expected at some point next year.