Notice2022-28581
Epic Games, Inc.; Analysis of Proposed Consent Order To Aid Public Comment
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
January 4, 2023
Issuing agencies
Federal Trade Commission
Abstract
The consent agreement in this matter settles alleged violations of Federal law prohibiting unfair or deceptive acts or practices. The attached Analysis of Proposed Consent Order to Aid Public Comment describes both the allegations in the draft complaint and the terms of the consent order--embodied in the consent agreement-- that would settle these allegations.
Full Text
<html>
<head>
<title>Federal Register, Volume 88 Issue 2 (Wednesday, January 4, 2023)</title>
</head>
<body><pre>
[Federal Register Volume 88, Number 2 (Wednesday, January 4, 2023)]
[Notices]
[Pages 354-356]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-28581]
[[Page 354]]
=======================================================================
-----------------------------------------------------------------------
FEDERAL TRADE COMMISSION
[File No. 192 3203]
Epic Games, Inc.; Analysis of Proposed Consent Order To Aid
Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement; request for comment.
-----------------------------------------------------------------------
SUMMARY: The consent agreement in this matter settles alleged
violations of Federal law prohibiting unfair or deceptive acts or
practices. The attached Analysis of Proposed Consent Order to Aid
Public Comment describes both the allegations in the draft complaint
and the terms of the consent order--embodied in the consent agreement--
that would settle these allegations.
DATES: Comments must be received on or before February 3, 2023.
ADDRESSES: Interested parties may file comments online or on paper by
following the instructions in the Request for Comment part of the
SUPPLEMENTARY INFORMATION section below. Please write ``Epic Games,
Inc.; File No. 192 3203'' on your comment and file your comment online
at <a href="https://www.regulations.gov">https://www.regulations.gov</a> by following the instructions on the
web-based form. If you prefer to file your comment on paper, please
mail your comment to the following address: Federal Trade Commission,
Office of the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610
(Annex D), Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT: James Doty (202-326-2628), Bureau of
Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue
NW, Washington, DC 20580.
SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule Sec. 2.34, 16 CFR
2.34, notice is hereby given that the above-captioned consent agreement
containing a consent order to cease and desist, having been filed with
and accepted, subject to final approval, by the Commission, has been
placed on the public record for a period of 30 days. The following
Analysis to Aid Public Comment describes the terms of the consent
agreement and the allegations in the complaint. An electronic copy of
the full text of the consent agreement package can be obtained at
<a href="https://www.ftc.gov/news-events/commission-actions">https://www.ftc.gov/news-events/commission-actions</a>.
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before February 3,
2023. Write ``Epic Games, Inc.; File No. 192 3203'' on your comment.
Your comment--including your name and your state--will be placed on the
public record of this proceeding, including, to the extent practicable,
on the <a href="https://www.regulations.gov">https://www.regulations.gov</a> website.
Because of heightened security screening, postal mail addressed to
the Commission will be subject to delay. We strongly encourage you to
submit your comments online through the <a href="https://www.regulations.gov">https://www.regulations.gov</a>
website.
If you prefer to file your comment on paper, write ``Epic Games,
Inc.; File No. 192 3203'' on your comment and on the envelope, and mail
your comment to the following address: Federal Trade Commission, Office
of the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex D),
Washington, DC 20580.
Because your comment will be placed on the publicly accessible
website at <a href="https://www.regulations.gov">https://www.regulations.gov</a>, you are solely responsible for
making sure your comment does not include any sensitive or confidential
information. In particular, your comment should not include sensitive
personal information, such as your or anyone else's Social Security
number; date of birth; driver's license number or other state
identification number, or foreign country equivalent; passport number;
financial account number; or credit or debit card number. You are also
solely responsible for making sure your comment does not include
sensitive health information, such as medical records or other
individually identifiable health information. In addition, your comment
should not include any ``trade secret or any commercial or financial
information which . . . is privileged or confidential''--as provided by
Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule Sec.
4.10(a)(2), 16 CFR 4.10(a)(2)--including competitively sensitive
information such as costs, sales statistics, inventories, formulas,
patterns, devices, manufacturing processes, or customer names.
Comments containing material for which confidential treatment is
requested must be filed in paper form, must be clearly labeled
``Confidential,'' and must comply with FTC Rule Sec. 4.9(c). In
particular, the written request for confidential treatment that
accompanies the comment must include the factual and legal basis for
the request, and must identify the specific portions of the comment to
be withheld from the public record. See FTC Rule Sec. 4.9(c). Your
comment will be kept confidential only if the General Counsel grants
your request in accordance with the law and the public interest. Once
your comment has been posted on the <a href="https://www.regulations.gov">https://www.regulations.gov</a>
website--as legally required by FTC Rule Sec. 4.9(b)--we cannot redact
or remove your comment from that website, unless you submit a
confidentiality request that meets the requirements for such treatment
under FTC Rule Sec. 4.9(c), and the General Counsel grants that
request.
Visit the FTC Website at <a href="http://www.ftc.gov">http://www.ftc.gov</a> to read this document
and the news release describing the proposed settlement. The FTC Act
and other laws the Commission administers permit the collection of
public comments to consider and use in this proceeding, as appropriate.
The Commission will consider all timely and responsive public comments
it receives on or before February 3, 2023. For information on the
Commission's privacy policy, including routine uses permitted by the
Privacy Act, see <a href="https://www.ftc.gov/site-information/privacy-policy">https://www.ftc.gov/site-information/privacy-policy</a>.
Analysis of Proposed Consent Order To Aid Public Comment
The Federal Trade Commission (``FTC'' or ``Commission'') has
accepted, subject to final approval, an agreement containing a consent
order from Epic Games, Inc. (``Respondent''). The proposed consent
order has been placed on the public record for 30 days for receipt of
comments written by interested persons. Comments received during this
period will become part of the public record. After 30 days, the
Commission will again review the agreement and the comments received
and will decide whether it should withdraw from the agreement or make
final the agreement's proposed order.
Respondent is the developer and distributor of the video game
Fortnite. Respondent bills users for the purchase of virtual currency
(V-bucks) and also bills users' V-bucks for the purchase of items
within Fortnite. This matter concerns Epic's (1) billing for charges
without having obtained account holders' express, informed consent and
(2) deactivating the accounts of consumers who exercise their right to
dispute charges.
The Commission's proposed complaint alleges that Epic saved
parental credit card information by default and permitted subsequent
unauthorized purchases by children. Specifically, children were
permitted to make V-bucks purchases simply by pressing buttons, without
parental or card holder action or consent (for example, without entry
of a pin, password, or CVV number). Epic has also billed users of all
ages for unauthorized V-bucks charges within
[[Page 355]]
Fortnite; Epic designed purchase flows within the game so that unwanted
charges were easy to incur, as Epic was aware from the more than one
million complaints it received about the issue. Finally, Epic has
deactivated--in many cases, permanently--the accounts of consumers who
disputed unauthorized charges, denying them access to paid-for content.
The proposed consent order contains provisions designed to prevent
Respondent from engaging in similar acts or practices in the future.
Part I prohibits Respondent from billing consumers for charges without
procuring their express, informed consent. Part II bars Respondent from
denying consumers access to their accounts based on their exercise of
chargeback rights. Part III requires Respondent to pay $245,000,000 in
monetary relief. Part IV contains additional requirements regarding
monetary relief. Part V requires Respondent to provide sufficient
customer information to enable the Commission to administer consumer
redress.
Parts VI through X are reporting and compliance provisions. Part VI
requires Respondent to acknowledge receipt of the order, to provide a
copy of the order to certain current and future principals, officers,
directors, and employees, and to obtain an acknowledgement from each
such person that he or she has received a copy of the order. Part VII
requires Respondent to file a compliance report within one year after
the order becomes final and to notify the Commission within 14 days of
certain changes that would affect compliance with the order. Part VIII
requires Respondent to maintain certain records, including records
necessary to demonstrate compliance with the order. Part IX requires
Respondent to submit additional compliance reports when requested by
the Commission and to permit the Commission or its representatives to
interview Respondent's personnel. Finally, Part X is a ``sunset''
provision, terminating the order after twenty (20) years, with certain
exceptions.
The purpose of this analysis is to aid public comment on the
proposed order. It is not intended to constitute an official
interpretation of the proposed order or to modify its terms in any way.
By direction of the Commission.
April J. Tabor,
Secretary.
Concurring Statement of Commissioner Christine S. Wilson
Today, the FTC announced a settlement with Epic Games, the creator
of the popular online video game Fortnite. I support and applaud this
enforcement action, which takes important steps to protect the online
privacy of children, including teens. And I am grateful to our talented
staff for their excellent work on this case, which incorporates a
noteworthy unfairness count and novel but fully warranted injunctive
relief. This case clearly exemplifies the harms of insufficient privacy
protections, particularly for children. Concerned parents may wish to
review the FTC's helpful website with resources about protecting kids
online.\1\
---------------------------------------------------------------------------
\1\ Protecting Kids Online, Fed. Trade Comm'n, <a href="https://consumer.ftc.gov/identity-theft-and-online-security/protecting-kids-online">https://consumer.ftc.gov/identity-theft-and-online-security/protecting-kids-online</a> (last visited Dec. 18, 2022).
---------------------------------------------------------------------------
I write separately to explain my support both for the unfairness
count and the groundbreaking injunctive relief. Section 5 of the FTC
Act provides the necessary flexibility to address emerging threats to
consumers from new industries and evolving technologies.\2\ But the
Commission's unfairness authority is not unbounded. As I have
previously noted, the FTC must observe the boundaries of its statutory
authority and operate within the jurisdictional limits set by
Congress.\3\ Here, however, the elements of the unfairness test are
clearly satisfied--because Epic Games allegedly opted children into
voice and text communications with players around the world, children
were exposed to bullying, threats, and harassment, and were enticed or
coerced into sharing sexually explicit images and meeting offline for
sexual activity.\4\ And the novel injunctive mechanisms, which require
Epic Games to implement heightened privacy default settings, directly
address the privacy harms fostered by the company's alleged business
practices.
---------------------------------------------------------------------------
\2\ The Agency has used this flexible standard to address online
harms like digital stalking (Compl., Retina-X Studios, LLC, No. 172-
3118 (filed Oct. 22, 2019), <a href="https://www.ftc.gov/system/files/documents/cases/172_3118_retina-x_studios_complaint_0.pdf">https://www.ftc.gov/system/files/documents/cases/172_3118_retina-x_studios_complaint_0.pdf</a>), revenge
porn (Compl., Emp Media, Inc., No. 162-3052 (filed July 9, 2018),
<a href="https://www.ftc.gov/system/files/documents/cases/1623052_myex_complaint_1-9-18.pdf">https://www.ftc.gov/system/files/documents/cases/1623052_myex_complaint_1-9-18.pdf</a>), and invasions of people's homes
through web cameras (Compl., TRENDnet, Inc., No. 122-3090 (filed
Feb. 7, 2014), <a href="https://www.ftc.gov/enforcement/casesproceedings/122-3090/trendnet-inc-matter">https://www.ftc.gov/enforcement/casesproceedings/122-3090/trendnet-inc-matter</a>). See also Daniel J. Solove & Woodrow
Hartzog, The FTC and the New Common Law of Privacy, 114 Colum. L.
Rev. 583 (2014) (describing the FTC's role since the late 1990s in
enforcing privacy statutes and companies' privacy practices).
\3\ Dissenting Statement of Commissioner Christine S. Wilson,
Policy Statement on Breaches by Health Apps and Other Connected
Devices (Sept. 15, 2021), <a href="https://www.ftc.gov/system/files/documents/public_statements/1596356/wilson_health_apps_policy_statement_dissent_combined_final.pdf">https://www.ftc.gov/system/files/documents/public_statements/1596356/wilson_health_apps_policy_statement_dissent_combined_final.pdf</a>;
Dissenting Statement of Commissioner Christine S. Wilson, Final Rule
related to Made in U.S.A. Claims (July 1, 2021), <a href="https://www.ftc.gov/system/files/documents/public_statements/1591494/2021-07-01_commissioner_wilson_statement_musa_final_rule.pdf">https://www.ftc.gov/system/files/documents/public_statements/1591494/2021-07-01_commissioner_wilson_statement_musa_final_rule.pdf</a>; Statement
of Commissioner Christine S. Wilson Concurring in Part, Dissenting
in Part, Notice of Proposed Rulemaking related to Made in U.S.A.
claims (June 22, 2020), <a href="https://www.ftc.gov/system/files/documents/public_statements/1577099/p074204musawilsonstatementrev.pdf">https://www.ftc.gov/system/files/documents/public_statements/1577099/p074204musawilsonstatementrev.pdf</a>.
\4\ See Compl., Epic Games, Inc., No. 222-3087 (filed Dec. 19,
2022).
---------------------------------------------------------------------------
I also write separately to underscore the dangers of insufficient
privacy protections, particularly for children, including teens. As I
write, close to three million gamers around the globe are playing
Fortnite.\5\ In the Battle Royale mode, players are matched with up to
99 other gamers in a format that allows combatants to communicate with
each other via voice and text. Despite knowing that adults and children
play the video game concurrently, Epic Games allegedly failed to
prioritize the safety of its young players when the company implemented
default settlings that allowed strangers to communicate with children
and teens. The complaint details how Epic Games chose to opt children
into conversations with unknown adults despite repeated warnings from
game designers, users, parents, and others that this approach violated
industry norms and carried significant risks.
---------------------------------------------------------------------------
\5\ Fortnite Live Player Count, Player Counter, <a href="https://playercounter.com/fortnite/">https://playercounter.com/fortnite/</a> (last visited Dec. 18, 2022).
---------------------------------------------------------------------------
The results? I offer three examples:
In 2018, a 13-year-old boy (called MV#1 in court pleadings) told
his doctor he was stressed because an adult male named ``Gavin'' whom
he met while playing Fortnite planned to travel from ``Gavin's'' home
in Pennsylvania to MV#1's home in Georgia for a visit. MV#1 wrote down
a list of things ``Gavin'' wanted him to do, including ``blow job,
making out, kissing, cuddling, and fingering.'' ``Gavin,'' later
identified as Gregory Mancini, flew to Georgia in November 2018 and
proposed to meet MV#1 at a Waffle House, where Mancini was arrested. A
subsequent search of Mancini's computer ``uncovered . . . child sexual
abuse material depicting very young minors, including images involving
adult males engaged in sexual abuse of
[[Page 356]]
boys appearing to be about two years of age.'' \6\
---------------------------------------------------------------------------
\6\ Sentencing Mem. of the U.S., United States v. Mancini, No.
1:20-cr-00031-SPB (W.D. Pa. Apr. 25, 2022).
---------------------------------------------------------------------------
Also in 2018, Sergeant Christopher S. Gilbert met ``Miss MN''
online playing Fortnite. Using the voice chat feature in the game,
``Miss MN'' told Gilbert she was 13 years old, and Gilbert told her he
was 22. The two traded Instagram account names and began exchanging
private messages through the Instagram text messaging feature. A court
subsequently concluded that Gilbert sexually abused ``Miss MN'' by
sending her digital pictures and videos of his penis, engaged in
inappropriate sexual conversations with her, and attempted to guilt her
into sending nude images of herself. A subsequent search of Gilbert's
phone revealed child pornography. Gilbert was convicted of sexual abuse
of a child and possession of child pornography.\7\
---------------------------------------------------------------------------
\7\ United States v. Gilbert, ARMY 20190766, 2020 WL 4458493
(Army Ct. Crim. App. July 31, 2020).
---------------------------------------------------------------------------
And in 2019, Juan Carlos Sandoval-Guerrero, using Fortnite, coerced
a young child (called Victim B in court pleadings) into sending images
that portray Victim B ``displaying his penis, masturbating his penis
with his hand and penetrating his anus with his finger. In some videos,
Victim B can be seen wearing a wireless headset of the type . . .
typically associated with video game systems like Xbox. During one of
the videos, Victim B can be heard talking about the points he got on a
game while he is masturbating his penis.'' In 2021, Sandoval-Guerrero
pled guilty to the production and attempted production of child
pornography in violation of 18 U.S.C. 2251(a), (e).\8\
---------------------------------------------------------------------------
\8\ Plea Agreement, United States v. Sandoval-Guerrero, No.
4:20-CR-06009-SMJ-1 (E.D. Wash. Apr. 1, 2021).
---------------------------------------------------------------------------
These examples should concern any parent whose kids enjoy playing
online video games. And they should serve as a wake-up call to skeptics
who believe that invasions of privacy lead merely to targeted
advertising.
Numerous news articles have reported that Fortnite and other online
games foster a target-rich hunting ground for sexual predators.\9\ The
National Center for Missing & Exploited Children, the nation's
centralized reporting system for suspected child sexual exploitation,
received more than 29.3 million reports of suspected child sexual
exploitation in 2021, including over 44,000 reported incidents of
online enticement of children for sexual acts.\10\ And the organization
noted that the reports of online enticement have been growing more
numerous each year. During my tenure as a Commissioner, I have been an
ardent advocate for federal privacy legislation,\11\ in part because of
the pernicious risks threatening children's safety online.\12\
---------------------------------------------------------------------------
\9\ Paige Gross, Predators are using Fortnite to Lure kids. Cops
say parents need to worry, <a href="http://NJ.com">NJ.com</a> (Sept. 21, 2018 12:30 p.m.),
<a href="https://www.nj.com/news/2018/09/fortnite_mindcraft_join_other_platforms_where_pred.html">https://www.nj.com/news/2018/09/fortnite_mindcraft_join_other_platforms_where_pred.html</a> (warning the
public about popular apps being used by people to abuse and exploit
teens and children); Nellie Bowles and Michael H. Keller, Video
Games and Online Chats Are `Hunting Grounds' for Sexual Predators,
N.Y. Times, Dec. 7, 2019, <a href="https://www.nytimes.com/interactive/2019/12/07/us/video-games-child-sex-abuse.html">https://www.nytimes.com/interactive/2019/12/07/us/video-games-child-sex-abuse.html</a> (detailing the efforts of
criminals to make virtual connections in order to exploit and abuse
children, including teens, through gaming and social media
platforms); Dustin Racioppi, `People don't want to talk about it,'
but reports of kids being exploited online have spiked amid
coronavirus pandemic, USA Today, Oct. 22, 2020, <a href="https://www.usatoday.com/story/news/nation/2020/10/22/coronavirus-child-abuse-nj-online-child-exploitation-reports-increase/6004205002/">https://www.usatoday.com/story/news/nation/2020/10/22/coronavirus-child-abuse-nj-online-child-exploitation-reports-increase/6004205002/</a>
(discussing the epidemic of online child exploitation during the
coronavirus pandemic).
\10\ CyberTipline 2021 Report, Nat'l Ctr. for Missing and
Exploited Child., <a href="https://www.missingkids.org/gethelpnow/cybertipline/cybertiplinedata#overview">https://www.missingkids.org/gethelpnow/cybertipline/cybertiplinedata#overview</a>.
\11\ Oral Statement of Commissioner Christine S. Wilson, FTC,
Before the U.S. House Committee on Energy and Commerce Subcommittee
on Consumer Protection and Commerce (July 28, 2021), <a href="https://www.ftc.gov/system/files/documents/public_statements/1592954/2021-07-28_commr_wilson_house_ec_opening_statement_final.pdf">https://www.ftc.gov/system/files/documents/public_statements/1592954/2021-07-28_commr_wilson_house_ec_opening_statement_final.pdf</a>; Christine
Wilson, Op-Ed, Coronavirus Demands a Privacy Law, WALL ST. J., May
13 2020, available at <a href="https://www.wsj.com/articles/congress-needs-to-pass-a-coronavirus-privacy-law-11589410686">https://www.wsj.com/articles/congress-needs-to-pass-a-coronavirus-privacy-law-11589410686</a>; Oral Statement of
Commissioner Christine S. Wilson, FTC, Before the U.S. Senate
Committee on Commerce, Science, and Transportation (April 20, 2021),
<a href="https://www.ftc.gov/system/files/documents/public_statements/1589180/opening_statement_final_for_postingrevd.pdf">https://www.ftc.gov/system/files/documents/public_statements/1589180/opening_statement_final_for_postingrevd.pdf</a>; Christine
Wilson, Privacy in the Time of Covid-19, TRUTH ON THE MARKET (Apr.
15, 2020), <a href="https://truthonthemarket.com/author/christinewilsonicle/">https://truthonthemarket.com/author/christinewilsonicle/</a>;
Christine S. Wilson, A Defining Moment for Privacy: The Time is Ripe
for Federal Privacy Legislation, Remarks at the Future of Privacy
Forum, Feb. 6, 2020, <a href="https://www.ftc.gov/system/files/documents/public_statements/1566337/commissioner_wilson_privacy_forum_speech_02-06-2020.pdf">https://www.ftc.gov/system/files/documents/public_statements/1566337/commissioner_wilson_privacy_forum_speech_02-06-2020.pdf</a>; Oral
Statement of Commissioner Christine S. Wilson Before the U.S. House
Committee on Energy and Commerce Subcommittee on Consumer Protection
and Commerce (May 8, 2019), <a href="https://www.ftc.gov/system/files/documents/public_statements/1592954/2021-07-28_commr_wilson_house_ec_opening_statement_final.pdf">https://www.ftc.gov/system/files/documents/public_statements/1592954/2021-07-28_commr_wilson_house_ec_opening_statement_final.pdf</a>; Oral Statement
of Commissioner Christine S. Wilson, FTC, Before the U.S. Senate
Committee on Commerce, Science, and Transportation Subcommittee on
Consumer Protection, Product Safety, Insurance, and Data Security
(Nov. 27, 2018), <a href="https://www.ftc.gov/system/files/documents/public_statements/1423979/commissioner_wilson_nov_2018_testimony.pdf">https://www.ftc.gov/system/files/documents/public_statements/1423979/commissioner_wilson_nov_2018_testimony.pdf</a>.
\12\ Christine S. Wilson, The FTC's Role in Supporting Online
Safety, Remarks at the Family Online Safety Institute, Nov. 21,
2019, <a href="https://www.ftc.gov/system/files/documents/public_statements/1557684/commissioner_wilson_remarks_at_the_family_online_safety_institute_11-21-19.pdf">https://www.ftc.gov/system/files/documents/public_statements/1557684/commissioner_wilson_remarks_at_the_family_online_safety_institute_11-21-19.pdf</a>.
---------------------------------------------------------------------------
I am not a Luddite. I recognize that children's lives can be
enriched through social media, gaming, and other online resources. But
online activity comes with risks, especially when internet products
have flawed or non-existent safeguards. The FTC's Section 5 authority
does not reach, and cannot prevent, every danger facing teens and
children on the internet today. Here, however, I am comfortable with
this use of our unfairness authority, and I am supportive of the
groundbreaking injunctive relief requiring privacy-protective settings
for children and teens, because I have reason to believe that Epic
Games knew that its products and/or services presented a substantial
risk of harm and did not take simple steps to address that risk.
[FR Doc. 2022-28581 Filed 1-3-23; 8:45 am]
BILLING CODE 6750-01-P
</pre></body>
</html>Indexed from Federal Register on January 4, 2023.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.