FTC Begins Issuing Refunds from Epic Games Settlement
The Federal Trade Commission (FTC) has started refunding over 629,000 customers of Epic Games, following a $245 million settlement agreed upon in 2022. This marks the first round of payouts related to allegations that Epic’s billing practices misled consumers and allowed unauthorized charges, particularly in the popular video game Fortnite.
The FTC accused Epic of employing deceptive design tactics, enabling children to make purchases without parental consent, and restricting access to content for users who disputed unauthorized charges. Epic agreed to pay $245 million to address these claims. The initial batch of refunds amounts to $72 million, with recipients receiving either PayPal transfers or checks averaging $114. Remaining funds will be distributed later.
Epic, in a December 2022 statement, explained that it has introduced changes to align its practices with user and regulatory expectations. These updates include requiring proper payment authorization and parental approval for children's transactions.
The FTC alleged that Epic’s design tactics tricked users into unintended purchases. Examples included accidental charges from button configurations that caused users to spend money while navigating menus or previewing items. The agency estimated that these practices led to unauthorized charges worth hundreds of millions of dollars.
Fortnite, a global hit with over 650 million registered players, has a significant player base in the United States, which accounts for nearly 22% of its users. Epic responded to criticism by implementing a "hold-to-purchase" feature to confirm transactions and giving players a clear option to save payment details.
The FTC highlighted complaints from parents, including a case where a 10-year-old racked up $500 in charges without parental approval. Disputes over such charges sometimes led Epic to lock accounts, with consumers warned they could face permanent bans for contesting future payments.
Epic acknowledged past issues, stating that accounts flagged for fraudulent transactions were only locked when fraud indicators were detected. It also reinstated thousands of accounts previously banned for chargebacks. Since June 2019, the company has introduced parental controls, daily spending limits for users under 13, and a policy against pay-to-win or gambling-like mechanics.
Broader Industry Concerns
In August, the Consumer Financial Protection Bureau (CFPB) warned parents that gaming companies often use tactics to encourage overspending, particularly through in-game currencies and confusing pricing. A 2024 report revealed that 46 million American children play video games, with most between 5 and 18 years old.
The CFPB criticized the use of unclear exchange rates, such as pricing in-game currency in ways that obscure real costs, and highlighted gambling-like features designed to drive compulsive spending.
Similar issues have been raised in Europe, where a coalition of consumer advocacy groups filed a complaint with the European Commission. They alleged that companies like Epic Games use misleading practices, such as concealing the real cost of digital items, leading to overspending.