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Epic Games pays $520 million for child privacy violations

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London, UK
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The Federal Trade Commission (FTC) filed a complaint against Epic Games on Monday on grounds of illegal personal data handling. Epic Games has agreed to pay Β£520 million in penalties and refunds.

Epic Games, publisher of popular games like Fortnite, Rocket League, and Fall Guys, has agreed to pay over $520 million in legal fees over alleged mishandling of customer privacy.

CNN first reported that Epic Games was charged with violating the Children’s Online Privacy Protection Act, supposedly collecting private information on children without parental permission in its most popular title Fortnite.

According to the FTC, over one million parents have complained to Epic Games’ support team about unauthorised charges made to children in-game without consent. They argue that it is far too easy for younger players to make purchases unwillingly, with no reasonable verification process in place to ensure customers know what they’re doing.

Parents also said that there were too many β€˜hoops’ to jump through in order to have their children’s data removed. Requests to delete information was also occasionally ignored or failed to go through, the claim states.

Epic Games’ response rejected FTC’s claims, stating that it had introduced privacy regulations and buying precautions in the five years since Fortnite was released. It will still pay the claims, however.

In fact, the publisher was keen to emphasise it’s belief that video game regulation laws are outdated, and do not represent how monetisation models within specific titles operate today.

In Epic Games’ statement, it said that β€˜[legal] statutes written decades ago don’t specify how gaming ecosystems should operate’. It stated it accepted the fines in order to β€˜be at the forefront of customer protection’.

These charges include $254 million USD to the FTC, which will be distributed to customers of Epic Games independently from the publisher. Another $275 million USD will also go to the FTC in order to β€˜resolve concerns related to children’s privacy’ in Fortnite.

In many ways, Epic Games serves as the face of free-to-play, games-as-a-service models.

Its innovative Battle Pass system, along with an emphasis on paid cosmetics, have now become industry staples. Many other developers mimic this same system in titles like Halo: Infinite, Overwatch, and Call of Duty.

Epic Games’ success has made it hugely profitable too. In April 2022, the company had a market cap of $32 billion USD, with $5.7 billion USD in revenue last year. Fortnite alone generated $9 billion USD in its first two years. It’s no surprise other companies are keen to get their slice of the monetary pie.

Being such a huge force within gaming, Epic Games sets a standard for responsible practices and data handling. Keeping customer privacy secure and maintaining transparency over its operations are vital.

Any failings may serve as indication to other publishers that they can get away with predatory monetisation practices and unfair user experiences.

This influence and wider industry impact was most prominent during the company’s β€˜stand’ against Apple and its App Store percentage cuts. While this didn’t cause a change in percentage policy, it did generate significant legal discussion over Apple’s monopoly over mobile gaming, and encourage other publishers to demand better rates for their products.

Epic Games has shown some positive signs that it’s serious about user privacy with this pay out and statement, but consumers should remain sceptical of any large tech or gaming firm handling their data.

Leaks, breaches, and unfair sharing of personal data is now a common reality of digital life, unfortunately, and we’ll need organisations like the FTC to call out suspicious behaviour whenever it pops up.

Editor In Chief London, UK

I’m Charlie (He/Him), the Editor In Chief at Thred. I studied English at the University of Birmingham and as a music and gaming enthusiast, I’m a nerd for pop culture. You can find me curating playlists, designing article headline images, and sipping cider on a Thursday. Follow me on Twitter, LinkedIn and drop me some ideas/feedback via email.

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