Fortnite game maker will pay $520M to settle FTC allegations

Epic Games, maker of the popular video game Fortnite, will pay $520 million to settle allegations from federal regulators that it tricked children into making in-game purchases and violated privacy laws.

The video game company will pay $275 million for violating a federal children's privacy law and will spend another $245 million in refunding customers for its alleged "unlawful billing practices," the Federal Trade Commission said Monday. 

"Epic used privacy-invasive default settings and deceptive interfaces that tricked Fortnite users, including teenagers and children," FTC Chair Lina Khan said in a statement.

The $275 million marks the largest fine the agency has ever obtained for the violation of an FTC rule, while the $245 million represents a record refund for a gaming case, the federal agency said.

"Use of dark patterns" to make illegal charges

The FTC sued Epic Games last year, alleging that the North Carolina company collected personal information about teenage players without parental consent. In a separate legal action, the FTC had also accused Epic Games of tapping so-called dark patterns, or deceptive designs, to trick young players into making in-game purchases. 

Dark patterns are deceptive online techniques used to nudge users into doing things they didn't intend to do.

For instance, players could be charged for a purchase by pressing one button in an attempt to wake the game up from sleep mode, the FTC said. Players could also be charged for a purchase while the game was in a loading screen or by pressing a nearby button when simply trying to preview an item, the FTC said.

"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," Samuel Levine, the FTC's Bureau of Consumer Protection director, said in the statement. 

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Fortnite is an online, multiplayer shooter-and-survival video game that exploded on the scene in 2017. Since then, the game has become a cultural phenomenon, captivating hours of screen time among the Gen Z crowd. 

Fortnite won a Webby Award for best multiplayer game in 2018 and 2019. It was nominated last year for favorite video game in Nickelodeon's Kids' Choice Awards.

Epic Games said it's making the payment to resolve concerns over "past designs of the Fortnite item shop and refund systems." 

"Statutes written decades ago don't specify how gaming ecosystems should operate," the company said. "The laws have not changed, but their application has evolved and long-standing industry practices are no longer enough."

The FTC will distribute the money "to Epic customers at their discretion," the company said.

In a statement Monday, Epic also said it accepted the settlement "because we want Epic to be at the forefront of consumer protection and provide the best experience for our players."

It added, "No developer creates a game with the intention of ending up here."

The Associated Press contributed to this report.