Epic Games fined a record $520 million; developer failed to protect children and duped customers

Epic Games, developer of the popular Fortnite online video game, has been involved in a high-profile legal battle with Apple after the latter removed Epic and Fortnite from the App Store. The developer offered Fortnite players the opportunity to buy in-app items through its own app storefront at a lower price since these transactions would bypass Apple's own in-app payment processing platform for which the tech giant takes a 15% to 30% cut.

This legal drama is now playing out in front of a three-judge panel sitting on the Ninth Circuit Court of Appeals and a ruling might not be made until the middle of next year. If this case goes to the Supreme Court, a final ruling might not be announced until 2025.

But right now, Epic has another problem. The Federal Trade Commission (FTC) announced today that it is fining the game developer a record amount in excess of $520 million for allegedly violating allegations that the company violated the Children’s Online Privacy Protection Act (COPPA). Additionally, the FTC said that Epic used certain interface designs known as dark patterns to trick users into making in-app and online purchases accidentally.

Discussing the dark patterns charge in more detail, the FTC wrote, "Fortnite's counterintuitive, inconsistent, and confusing button configuration led players to incur unwanted charges based on the press of a single button. For example, players could be charged while attempting to wake the game from sleep mode, while the game was in a loading screen, or by pressing an adjacent button while attempting simply to preview an item. These tactics led to hundreds of millions of dollars in unauthorized charges for consumers."

If the phrase dark patterns sounds familiar, that's because we told you last month that Google reached a $391.5 million settlement with the Michigan Attorney General office over location tracking. Among other things, Google had been accused of using dark patterns to get users to turn over personal information. For example, Google told users that they had to share location history with Google in order to "get the most from Google Maps." But the requested data wasn't necessary for Google Maps to work correctly.

The FTC notes that Epic's fine is actually made up of two record-breaking settlements. One is a $275 million fine for violating COPPA. This is the largest fine ever announced by the FTC for the violation of one of its rules. Epic also will be required to include strong default settings to protect the privacy of children and teens. Voice and text communications must be disabled by default. This payment goes to the Treasury Department.

As part of the FTC's order, Epic will also pay a fine of $245 million which will be used to refund customers of all ages for the developer's billing practices and use of dark patterns. This is the largest amount of money ordered by the FTC to be refunded in an action related to gaming. It also is the largest administrative order in the history of the agency.

FTC Chair Lina M. Khan said, "As our complaints note, Epic used privacy-invasive default settings and deceptive interfaces that tricked Fortnite users, including teenagers and children. Protecting the public, and especially children, from online privacy invasions and dark patterns is a top priority for the Commission, and these enforcement actions make clear to businesses that the FTC is cracking down on these unlawful practices."

Also chiming in was Associate Attorney General Vanita Gupta who stated "The Justice Department takes very seriously its mission to protect consumers’ data privacy rights. This proposed order sends a message to all online providers that collecting children’s personal information without parental consent will not be tolerated."