Epic Games, the creator of Fortnite, agreed to pay about $520 million over allegations that it violated children's privacy laws and used misleading gaming features that tricked customers into shelling out millions of dollars, the Federal Trade Commission said on Monday.
Epic collected the personal information of children under 13 without notifying their parents or obtaining parental consent, the FTC said in a legal complaint. In addition, the company illegally enabled real-time voice and text communications for children and teens by default, the federal agency said.
The settlement over privacy violations, which amounts to $275 million, requires that Epic adopt robust default privacy settings for children and teens, guaranteeing that voice and text communications are turned off by default.
In a separate finding, the FTC determined that Epic used confusing and inconsistent button configurations to trick players into unwanted payments. For example, users could be charged for attempting to wake the game up from sleep mode, the agency said.
The agreement over misleading gaming practices mandates that Epic refund consumers $245 million, the largest refund amount in a gaming case in the FTC's history.
In a statement, Epic confirmed the agreement.
"No developer creates a game with the intention of ending up here. The video game industry is a place of fast-moving innovation, where player expectations are high and new ideas are paramount," the company said in the statement.
"Statutes written decades ago don’t specify how gaming ecosystems should operate," the statement added. "The laws have not changed, but their application has evolved and long-standing industry practices are no longer enough."
Fortnite, an incredibly popular online first-person shooter, is free to download but charges users for in-game purchases of items like weapons and wardrobes.
Epic Games is also facing a class-action lawsuit in Canada brought by parents alleging that the game is intentionally addictive for children.
This is a developing story. Please check back for updates.