NEWS Epic Games to pay $520 million fine to FTC

Epic Games to pay $520 million fine to FTC

Panoramic view of the main stage of the Fortnite World Cup Finals esports tournament at Arthur Ashe Stadium in Flushing, New York, on July 26, 2019.

Catalina Fragoso | USA TODAY Sports | Reuters

Epic Games, developer and publisher of the video game Fornite, will pay a $520 million fine to settle a violation of the Children’s Online Privacy Protection Act (COPPA) with the FTC.

The FTC accused Epic of pairing children and teens “with strangers,” exposing them to “dangerous and traumatic issues,” and failing to introduce an appropriate parental control system.

“Protecting the public, especially children, from online privacy violations and dark patterns is a top priority for the Commission, and these enforcement actions show businesses that the FTC is fighting these illegal practices,” said FTC Chair Lena Khan ( Lina Khan in a statement.

Epic will pay two fines, including a $245 million fine for Fortnite’s in-game store and chargeback system, and another $275 million for children’s privacy concerns.

At the heart of the settlement is the FTC’s contention that Epic knowingly made decisions to appeal to children, citing “music, celebrity and brand partnerships,” including with Travis Scott, Ariana Grande deals, and tons of Fortnite-themed merchandise.

Despite the deliberate decision to market to children, the FTC said Epic failed to “cure” or address the COPPA violations.The FTC called Epic’s attempts to address harassment on the platform “weak-willed,” noting that it took Epic two years after launch to “finally [introduce] Parental control over the game. “

According to an internal Epic report cited by the FTC, Epic has failed to make decisions that protect children and comply with federal regulations despite studies showing that certain features, including voice chat, pose “risks of negative social behavior.”

“Consistently, children have been bullied, threatened, and harassed, including sexually, through Fortnite,” the FTC complaint reads.

The settlement is large, even by FTC standards, but nowhere near the $5 billion fine YuanFormerly Facebook, was ordered to pay in 2019.

Still, according to court documents reviewed by The Verge, it’s a pretty big blow to a company that raked in $5.5 billion in profits between 2018 and 2019.

“Of course, to enable parental controls, a parent first needs to be aware of their existence,” the FTC complaint states. Epic didn’t introduce an age verification system until 2019, “long after Epic had acquired empirical evidence that a large number of Fortnite players were under 13.”

“The laws haven’t changed, but their application has, and long-standing industry practice is no longer sufficient. We accepted this agreement because we want Epic to be at the forefront of consumer protection and provide our players with the best possible Great experience,” Epic said in a statement.

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