FTC Disbursing $72 Million to Epic Games’ Customers Impacted by Billing Practices

December 10, 2024 TruthUSA

The refunds are the first round of payments from a $245 million settlement Epic entered with the Federal Trade Commission in 2022.

The U.S. Federal Trade Commission (FTC) has started issuing refunds to over half a million Epic Games customers allegedly impacted by the Fortnite creator’s billing practices.

In 2022, the FTC secured a settlement agreement with Epic Games after the agency alleged that the company used certain design tactics to “trick players into making unwanted purchases, let children rack up unauthorized charges without any parental involvement, and blocked some users who disputed unauthorized charges from accessing their purchased content,” according to a Dec. 9 statement from the agency.

Epic agreed to pay $245 million as part of the settlement to resolve the allegations. The FTC is now distributing the first round of payments, totaling over $72 million.

“Today, the FTC is sending 629,344 total payments, about half of which are PayPal payments and the other half are checks,” the agency said. “Recipients should redeem their PayPal payment within 30 days and cash their checks within 90 days, as indicated on the check. The average payment is about $114.”

The remaining funds will be distributed at a later date.

In a December 2022 statement, released after the settlement, Epic said they have been implementing changes over the past years to ensure the ecosystem “meets the expectations of our players and regulators.”

This includes ensuring proper authorization of payments and parental approval for spending by children.

The FTC said in a complaint that Epic’s popular video game Fortnite charged money for certain in-game items like dance moves and costumes.

The agency alleged that Epic used “illegal dark patterns”—design practices aimed at tricking users into doing something they did not intend to do—and duped customers into making payments.

“Fortnite’s counterintuitive, inconsistent, and confusing button configuration led players to incur unwanted charges based on the press of a single button,” the FTC said. “For example, players could be charged while attempting to wake the game from sleep mode, while the game was in a loading screen, or by pressing an adjacent button while attempting simply to preview an item. These tactics led to hundreds of millions of dollars in unauthorized charges for consumers.”

According to a Dec. 2 post from data analytics company DemandSage, the United States accounted for over nearly 22 percent of the total player count in Fortnite. The game has more than 650 million registered players worldwide with over 110 million monthly active players.

In its December 2022 response, Epic said they updated the payment system with a “hold-to-purchase mechanic that re-confirms a player’s intent to buy” so as to prevent unintended transactions.

The company also started offering an “explicit yes or no choice to save payment information.”

FTC said Epic allowed children to purchase digital items online without parental consent or authorization from the credit card holder.

A parent claimed in a consumer complaint that a game account for his 10-year-old son was charged without his authorization.

“I am really disappointed that there is no check and balances that alerted me of these charges, and a 10 year old can purchase coins worth almost $500 so easily,” he said.

When some customers disputed the charges with their credit card companies, Epic locked their accounts. And when Epic agreed to reinstate the accounts, “consumers were warned that they could be banned for life if they disputed any future charges,” according to the FTC.

“Epic ignored more than one million user complaints and repeated employee concerns that ‘huge’ numbers of users were being wrongfully charged,” the agency said.

The Epoch Times reached out to Epic Games for further comment but did not receive a response by publication time.

According to Epic’s 2022 statement, the game developer would only disable accounts of users who seek reversal of unauthorized transactions if certain “fraud indicators” are observed.

“We have restored thousands of accounts that were banned due to reported chargebacks under our previous policy.”

Epic Games introduced parental controls in June 2019, allowing them to decide whether to authorize purchases by their children. The company also imposed a daily spending limit for users below 13 years of age.

The updated policy also promised “no pay-to-win or pay-to-progress mechanics in player-versus-player experiences” as well as “no gambling ever.”

Consumer Advisory

In August, the U.S. Consumer Financial Protection Bureau (CFPB) issued an Aug. 28 advisory warning parents that video game makers were targeting their wallets through their children.

Around 46 million American children are estimated to play video games, with over 80 percent between the ages of 5 and 18, according to a 2024 report from the Entertainment Software Association.

The industry is using “tricks, technology, and surveillance data” to make players spend money, according to the CFPB.

“Many games require a form of payment to be stored on the gaming account to readily convert dollars to in-game currency. Video game companies can use those in-game currencies to conceal the real costs of transactions in game,” the bureau said. “For example, they use confusing and inconsistent exchange rates (pay $2.95 for 320 coins or pay $9.05 for 1020 coins) that make the mental math from one currency to the other difficult.”

Many games also implement “gambling-like design tricks” to boost compulsive spending behaviors among users, the bureau noted.

Similar concerns have been raised in Europe. In September, BEUC, a group of 44 consumer organizations representing the interests of European consumers, filed a complaint against several video game companies, including Epic Games, with the European Commission.

The group alleged these companies are implementing “deceptive practices” that affect millions of customers in the region.

For instance, gamers are often not capable of seeing the actual cost of digital items being sold by the games, leading to overspending, the group said, while pointing out that the alleged “misleading tactics” violate rules against unfair commercial practices.

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