Epic Games to pay $520 million over children’s privacy and trickery charges

Five years ago, Epic Games debuted Fortnite, a video game that immediately became popular with millions of young people. It was simple to register, begin playing, and initiate text or voice chats with new players through the game.

Some kids even loaded up their parents’ credit cards with hundreds of dollars worth of digital purchases, such as vibrant clothing for their video game characters. Fortnite became a billion-dollar smash for Epic Games thanks to those purchases and other branded goods like action figurines, which attracted more than 400 million users.

The Federal Trade Commission charged the company on Monday with improperly gathering the personal information of children, harming young players by pairing them up with strangers on Fortnite while enabling live communications, and, separately, deceiving millions of players into making unintended purchases using deceptive strategies known as “dark patterns.” Epic agreed to pay a record $520 million in fines and refunds to resolve the FTC’s allegations in a landmark agreement that serves as a warning to the entire video game industry.

The crackdown is the most recent proof that the agency is making good on promises made by Lina M. Khan, its chair, to act more forcefully in regulating the tech sector. The government took a bold step earlier this month to prevent the consolidation of the video game industry when it filed a lawsuit to challenge Microsoft’s $69 billion acquisition of Activision Blizzard, the firm responsible for the well-known Call of Duty series.

In a statement, Epic Games claimed that over the years, it had implemented several child privacy and purchase precautions and that “the practises detailed in the FTC’s complaints are not how Fortnite operates.”

In two different incidents, the company’s proposed settlement agreements with the FTC entail record sums.

In order to resolve charges from regulators that Epic had collected personal information from minors under the age of 13 who were playing Fortnite without getting verifiable parental consent, the company agreed to pay $275 million.

The agency claimed in a legal complaint submitted on Monday in U.S. District Court for the Eastern District of North Carolina, where Epic is based, that the company also made parents “jump through hoops” to have their children’s data deleted and occasionally failed to honour parents’ deletion requests.