Epic Games resolving FTC’s children privacy law violation claims with $520M settlement

Epic Games, the American video game and software developer that created the popular “Fortnite” game title, opted to settle its case related to allegations that it has invaded the privacy of children and tricked players into making purchases.

To resolve this US Federal Trade Commission’s (FTC) allegations, the company is shelling out a total of $520 million. This settlement payout is said to be a record-breaking amount for a case of its kind.

As part of the agreement, the North Carolina-headquartered game developer is paying $275 million to the U.S. to settle the claims it breached the Children’s Online Privacy Protection Act (COPPA) when it collected the personal information of children who are under 13 years of age without getting their parents’ consent.

Fox Business reported that the FTC said on Monday, Dec. 19, that the settlement is the largest fine that it has ever enforced for a policy that it implements. The $520 million settlement will also cover the claim that Epic Games misled millions of players, children and teens alike, so they will buy items on the game.

Moreover, the trade commission said the agreement would resolve two civil complaints it has filed against Epic games. In the lawsuit, the company was also accused of illegally allowing real-time voice and text chat communications for kids and teens while playing by default.

The FTC said that this placed children at risk by connecting them with strangers. The agency said, as a result, some of them also experienced bullying, harassment, threatened, and were “exposed to dangerous and psychologically traumatizing issues such as suicide."

Epic Games announced the settlement on Monday, and part of its statement reads, “Epic has reached a settlement with the Federal Trade Commission. In it, Epic will pay $245 million USD to the FTC to resolve concerns related to past designs of the Fortnite item shop and refund systems in Fortnite, which the FTC will use to distribute to Epic customers at their discretion. Epic will also pay $275 million USD to the FTC to resolve concerns related to children’s privacy in Fortnite.”

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