The publisher and developer of the computer game Fornite, Epic Games, has agreed to pay the FTC $520 million as part of a settlement for violations of the Children’s Online Privacy Protection Act (COPPA).
The FTC had charged Epic with placing kids and teenagers “with strangers,” subjecting them to “dangerous and psychologically distressing issues,” and failing to implement suitable parental control systems.
In order to settle allegations that it violated the Children’s Online Privacy Protection Act (COPPA) by collecting the personal information of children under the age of 13 without first obtaining their parents’ verifiable consent, Epic has agreed to pay the US government $275 million. According to the FTC, it is the biggest fine it has ever assessed for breaking a rule it has enforced.
In a second, separate settlement, Epic will fork out $245 million in payments to customers who the FTC claims were injured by user-interface design decisions that were misleading. According to the FTC, this accord represents the largest administrative order in agency history.
The FTC reports- “As our complaints note, Epic used privacy-invasive default settings and deceptive interfaces that tricked Fortnite users, including teenagers and children,” said FTC Chair Lina M. Khan. “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.”
“The Justice Department takes very seriously its mission to protect consumers’ data privacy rights,” said Associate Attorney General Vanita Gupta. “This proposed order sends a message to all online providers that collecting children’s personal information without parental consent will not be tolerated.”
Epic’s video game Fortnite is generally free to download and play but charges users for in-game items such as costumes and dance moves. The game has more than 400 million users worldwide. The FTC alleged in two separate complaints that North Carolina-based Epic engaged in several unlawful practices.
“Epic put children and teens at risk through its lax privacy practices, and cost consumers millions in illegal charges through its use of dark patterns,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Under the proposed orders announced today, the company will be required to change its default settings, return millions to consumers, and pay a record-breaking penalty for its privacy abuses.”
Privacy Violations:
Violated COPPA by Failing to Notify Parents, Obtain Consent: The FTC alleged that Epic was aware that many children were playing Fortnite–as shown through surveys of Fortnite users, the licensing and marketing of Fortnite toys and merchandise, player support and other company communications–and collected personal data from children without first obtaining parents’ verifiable consent. The company also required parents who requested that their children’s personal information be deleted to jump through unreasonable hoops, and sometimes failed to honor such requests.
Default settings harm children and teens: Epic’s settings enable live on-by-default text and voice communications for users. The FTC alleges that these default settings, along with Epic’s role in matching children and teens with strangers to play Fortnite together, harmed children and teens. Children and teens have been bullied, threatened, harassed, and exposed to dangerous and psychologically traumatizing issues such as suicide while on Fortnite.
Illegal Dark Patterns:
Used dark patterns to trick users into making purchases: The company has deployed a variety of dark patterns aimed at getting consumers of all ages to make unintended in-game purchases. 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.
Charged account holders without authorization: Children and other users who play Fortnite can purchase in-game content such as cosmetics and battle passes using Fortnite’s V-Bucks. Up until 2018, Epic allowed children to purchase V-Bucks by simply pressing buttons without requiring any parental or card holder action or consent. Some parents complained that their children had racked up hundreds of dollars in charges before they realized Epic had charged their credit card without their consent. The FTC has brought similar claims against companies such as Amazon, Apple, and Google for billing consumers millions of dollars for in-app purchases made by children while playing mobile app games without obtaining their parents’ consent.
Blocked access to purchased content: The FTC alleged that Epic locked the accounts of customers who disputed unauthorized charges with their credit card companies. Consumers whose accounts have been locked lose access to all the content they have purchased, which can total thousands of dollars. Even when Epic agreed to unlock an account, consumers were warned that they could be banned for life if they disputed any future charges.
Epic ignored more than one million user complaints and repeated employee concerns that “huge” numbers of users were being wrongfully charged. In fact, Epic’s changes only made the problem worse, the FTC alleged. Using internal testing, Epic purposefully obscured cancel and refund features to make them more difficult to find.
As part of the proposed administrative order with the FTC over the company’s unlawful billing practices, Epic must pay $245 million, which will be used to provide refunds to consumers. In addition, the order prohibits Epic from charging consumers through the use of dark patterns or from otherwise charging consumers without obtaining their affirmative consent. The order also bars Epic from blocking consumers from accessing their accounts for disputing unauthorized charges. Information Source FTC.com
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