Epic Games Pays $520 Million to FTC to Settle Privacy Violation and Dark Pattern Allegations

  • The FTC reached two separate settlements with Epic Games, Inc., the creator of the online video game Fortnite, for a combined total of $520 million. The first settlement resolves allegations that the company violated the Children’s Online Privacy Protection Act (COPPA) and the FTC Act by collecting personal information from children without appropriate parental consents. The second settlement resolves allegations that the company violated the FTC Act by charging consumers for certain in-game items without first obtaining express informed consent.
  • According to the COPPA complaint, Epic Games was aware that many of the users of Fortnite were children, and yet Fortnite’s default settings allegedly collected personal data without meeting the appropriate parental notice, consent, review and deletion requirements. In addition, the game’s default settings allowed players to connect and converse in real-time with other players online, which allegedly exposed children to bullying, harassment, and other potentially harmful situations. Under the terms of the settlement, Epic Games must pay $275 million in civil penalties and make reasonable efforts to ensure parental notice and consent before collecting or using a child’s personal data or enabling their ability to engage in voice and text communication. In addition, the company must honor parental requests for deletion of personal information collected from minors, delete personal information previously collected for children under 13 for which the company has not obtained appropriate parental consent, establish and implement a comprehensive privacy program, and undertake regular privacy assessments by a third party.
  • According to the second complaint, Epic used design tricks known as “dark patterns” that made it easy for users to make purchases within the game without realizing it. These dark patterns also allegedly allowed children to easily make purchases that were not authorized by their parents. Users were allegedly prevented from cancelling or requesting refunds for these charges by additional dark patterns. Under the terms of the settlement, Epic Games must pay $245 million in civil penalties that may be used to refund improperly charged customers. In addition, the company must provide the FTC with sufficient information to allow the Commission to refund harmed customers and must submit compliance reports going forward, among other things.
  • Cozen O’Connor’s Ann-Marie Luciano and Emily Yu recently wrote an article for Law360 providing a deeper dive into the interest of the FTC and AGs in companies’ use of dark patterns, and offering practical guidance to help businesses minimize enforcement risk.