A Blog About Online Gaming and Entertainment Regulations
A Cautionary Tale Courtesy of Fortnite
A fast-growing segment of online gaming is the in-game purchase on (sometimes free) games/apps in exchange for virtual items. The virtual items can be mere cosmetic game enhancements, features that increase a player’s likelihood of success, and many other options. Because these virtual items are purchased with real world funds, companies must be vigilant in employing good practices such as clear and conspicuous disclosures of all terms, ensuring customers have full knowledge and decision over any purchasing decisions, and, never engaging in deceptive advertising.
Unfortunately, sometimes companies fail to properly implement safeguards to ensure they are operating in accordance with those best practices. For example, in a game like Fortnite (which is made by Epic Games Inc.), one can purchase gear, character “skins,” and dance moves (e.g., V-Bucks (the in-game currency) or other in-game items (like gear, llamas, or battle passes)). There are significant legal concerns about some of the marketing practices employed to sell these items, especially since a significant portion of their customer base are minors (and likely using their parents credit card to pay for their purchases). The Federal Trade Commission (“FTC”) entered into a settlement agreement with Epic concerning its practices.
In the case of Fortnite, the FTC alleged that players may not have known that Epic saved their payment information, that kids could easily purchase virtual items (totaling hundreds or even thousands of dollars) without any parental confirmation of the purchase, and, Epic employed a set of design tricks (i.e. “dark patterns”, which refers to designing a counterintuitive, inconsistent, and confusing button configuration so players incur unwanted charges based on the press of a single button) that charged millions of players for unwanted and unintended purchases of virtual items.
Even more troubling, the FTC alleged that Epic made it difficult to cancel the purchase and even locked players out of the game if they disputed the charge. In other words, users spent countless hours playing the game and spending huge sums on purchases of virtual items in order to build their profile, and then, if they disputed a wrongful or unauthorized charge with their credit card company about a charge that Epic made against their account, Epic would block them from their account and they lost all access to the game that they already paid for (and all the additional virtual items for which they had also already paid ).
In light of the FTC’s allegations, Epic agreed to pay $245 million to consumers to settle the FTC’s allegations relating to unauthorized or unwanted in-game purchases. The order also prohibits Epic from charging consumers through the use of dark patterns or from otherwise charging consumers without obtaining their affirmative consent. While seemingly a commonsense requirement, Epic has now agreed to obtain authorization from both players and parents to confirm purchases. And, Epic will no longer block users from their account simply because a user disputed their credit card charges.
Additionally, this week the FTC began sending emails to over 37 million Fortnite players to notify them of their eligibility for a settlement payment (which depends on the timeline of when purchases were made) and instructions on how to file a claim. [If one doesn’t get an email by October 19, 2023, then one can (i) use their Epic account ID to file a claim and apply online at www.fortniterefund.com/file-a-claim, (ii) call the administrator at 1-833-915-0880, or (iii) email email@example.com for help.] All claims must be filed by January 17, 2024.
Of course, even assuming a claim is approved, the actual amount of any settlement will depend on several factors such as the amount one was charged, and, most importantly, by how many people file a claim. Often, a headline grabbing settlement amount by the FTC like the $245 million dollar amount does not equal significant settlement checks to each individual. For instance, the $245 million settlement equals approximately $6.62 per user- which is not nearly as impressive and is certainly not going to enable most users to recoup their losses.
Epic’s consent decree with the FTC signals that the agency remains vigilant in enforcing consumer protections in the online gaming space. The FTC has a heightened interest when alleged unlawful practices are aimed at certain groups including children, the elderly, and veterans. More recently, the agency has a particular focus on “dark patterns,” including the inability or difficulty of consumers to cancel charges or subscriptions. The FTC also will continue to bring enforcement actions against companies that impose charges without sufficient notice and consent to those charges. The word to the wise here – whether “Joe” is buying a game enhancement, an avatar, or some recurring product or service – make the charges clear and conspicuous, and obtain affirmative consumer consent. Game on – as long as the practices are clear and comply with the FTC’s evolving requirements.