Video Game Maker Settles DOJ and FTC Charges for Violating Children's Privacy Protection Law

The DOJ and FTC reached a record settlement, pending court approval, against the maker of the popular video game "Fortnite" for violating the Children's Online Privacy Protection Act ("COPPA") and the Federal Trade Commission Act.

In the civil Complaint, filed in the U.S. District Court for the Eastern District of North Carolina, the DOJ and FTC alleged that the video game maker knowingly collected private information from children playing "Fortnite" without obtaining parental consent in violation of the COPPA Rule. The agencies further alleged that the default privacy settings of "Fortnite" put children in "real-time communication" with adult players in violation of Section 5 ("Unfair methods of competition unlawful; prevention by Commission") of the FTC Act. The video game maker agreed to (i) a record civil penalty of $275 million, (ii) a prohibition against using data collected from minors without parental consent and (iii) compliance with related reporting procedures. The agreement also requires the video game maker "to maintain default privacy settings that protect children's and teens' privacy, to delete certain personal information of children that it previously collected, and to maintain a comprehensive privacy program that protects certain personal information." The settlement requires approval by the Court.

In a separate administrative Complaint, filed before FTC, the agency alleged that the defendant used "illegal dark patterns" to trick children into making in-game purchases without parental approval. The agency said that "Fortnite" employed a design scheme that was "counterintuitive, inconsistent and confusing," and resulted in unauthorized charges totaling in the hundreds of millions. Additionally, FTC alleged that when users disputed such charges, the defendant would lock their respective accounts and unjustly block access to all purchased content. As alleged, in certain instances, the defendant threatened users with permanent lifetime bans if future charges were disputed.

FTC voted to require the defendant to (i) pay $245 million in refunds to players, (ii) obtain affirmative consent for in-game purchases and (iii) stop the practice of locking user accounts for billing disputes.

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