Back in May this year Epic Games was fined €1,125,000 by the Netherlands Authority for Consumer and Markets for engaging in “unfair commercial practices” regarding Fortnite players under the age of 18.
The ACM investigation revealed that the Fortnite creator exploited children’s vulnerabilities through design choices in its item shop, including the use of phrases like “get it now” or “buy now” in advertisements.
These practices were deemed as illegally aggressive commercial practices, for which the company was fined €562,500. The investigation also found that Epic Games used countdown timers on ads for available items, exploiting children’s fear of missing out. The publisher was fined a further €562,500 for this violation.
So what can developers do to avoid a similar fate? And when does clever, timely promotion cross the line into unfair and illegal exploitation of a young audience?
To find out more we reached out to FUTURA Digital, a company offering end-to-end legal and strategic assistance for digital companies. FUTURA specialise in picking apart the legal minefield of the digital world, providing safety and confidence for entrepreneurs seeking to provide new services.
Futura Digital’s head of digital Alina Davletshina takes up Epic’s ACM story.
What can developers do to avoid a similar fate? And when does clever, timely promotion cross the line into unfair and illegal exploitation of a young audience?
Epic just got hit in the Netherlands. So what happened?
The Netherlands Authority for Consumers and Markets (ACM) imposed two fines. The regulator accused the company of pressuring children into making in-game purchases through targeted advertising and aggressive commercial practices, such as “buy now” phrases and countdown timers.
These methods pushed minors to make quick purchases.
Epic Games’ reaction
Epic Games have already appealed the decision, claiming it is unlawful. The company also referenced its measures to protect children which it had undertaken earlier, including:
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Restricting purchases and access to certain features until parental consent is obtained for players under 16 years old.
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Implementing a parental control system requiring a PIN code before purchases can be made.
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Introducing a daily spending limit for players under 13 years old.
However, these measures were deemed insufficient to demonstrate the company’s good faith as regards interacting with underage players.
A lawyer’s opinion
The fine imposed on Epic Games could set a significant precedent in the fight against aggressive commercial practices in the gaming industry.
The implications of this case extend beyond Epic Games and the Netherlands. It reflects a growing global awareness and regulatory focus on the ethical responsibilities of gaming companies. As more jurisdictions follow suit, we may see a paradigm shift in how in-game purchases and advertising are managed, particularly concerning young and vulnerable audiences.
In the long term, this precedent could lead to:
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Tighter regulatory requirements and development of new standards as best practices in the industry, focused on creating a safer environment for children.
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Placing greater pressure on gaming companies and their requirements to comply with such regulations.
However, there is still a lack of clear understanding as to what exactly gaming companies should do in order to avoid, or at least minimize, their risks.
Companies have nothing left but to find themselves a balance between regulatory risks and their business interest.
Obviously, there is a growing demand for transparency in how games are marketed to children, and companies are being pushed to adopt more ethical marketing strategies that clearly communicate costs and require explicit parental consent. While there are fairly clear rules on privacy and kids personal data protection, there are as yet no official clarifications or guidelines on marketing targeted at children from major regulators, and companies have nothing left but to find themselves a balance between regulatory risks and their business interest.
Similar precedents in the gaming industry
The Epic/Netherlands case, although of precedential nature, is not the first such example in history. Here is a list of similar cases that brought up the issue of safe space for children compliance:
- TikTok: In 2019, the Federal Trade Commission (FTC) in the United States fined TikTok $5.7 million for violating the Children’s Online Privacy Protection Act (COPPA). The fine was related to TikTok’s data collection practices and the lack of parental consent mechanisms.
- Apple and Google: In 2021, Italy fined Apple and Google €34.5 million for aggressive marketing strategies, which included misleading advertising and lack of transparency in subscription services.
Earlier, in 2014, both Apple and Google faced significant fines from the Federal Trade Commission (FTC) in the United States for allowing children to make unauthorized in-app purchases. Apple agreed to refund $32.5 million to consumers for failing to obtain parental consent for in-app purchases made by children.
Similarly, Google settled for $19 million for similar practices in its app store. Both companies were criticized for inadequate parental controls and misleading billing practices.
- EA: In 2020, the Netherlands fined Electronic Arts €10 million for the inclusion of loot boxes in its FIFA game series. The regulator argued that loot boxes constituted a form of gambling and targeted minors.
- Sony and Microsoft: In various jurisdictions, both Sony and Microsoft have faced scrutiny and fines related to in-game purchases and their effects on minors. These cases often focus on the transparency and ease with which children can make purchases.
- Disney-owned Playdom: The company was fined $3 million by the FTC for illegally collecting and disclosing personal information from hundreds of thousands of children without parental consent.
