Last month, the guardian of a California child filed a potential federal class-action lawsuit alleging that Epic Games, the Cary-based company behind the hugely successful video game Fortnite, takes advantage of minors by getting them to unwittingly spend gift cards and their parents’ money on in-app purchases.
If the case is successful, it could upend the multibillion-dollar gaming industry, says Mia Consalvo, a professor of game studies and design at Concordia University in Montreal.
“Obviously, it would be big,” Consalvo says. Not only would it hurt Epic Games—a company that reportedly grossed $3 billion in profits in 2018, according to the website TechCrunch, and is valued at $15 billion—but it could have ripple effects as well. “It would cause a lot of fear and concern, not just with Epic but across the game industry.”
Central to the lawsuit, first reported by the Triangle Business Journal, is this question: Who is to blame for a child’s irresponsible purchase—the parents who gave them access to their credit card, or the game-maker who allegedly suckered them into buying?
The lawsuit alleges the latter. And it says that’s how Fortnite makes its money.
“The video game Fortnite is targeted at children,” says the complaint, which was filed June 21. “Although offered for free and may be downloaded for no cost, the Fortnite game is designed to induce in-app purchases. … These games are highly addictive, designed deliberately so, and tend to compel children playing them to make purchases.”
Neither the lawyers who filed the complaint nor representatives from Epic Games responded to the INDY’s requests for comment.
Released nearly two years ago, Fortnite, which is free to download on most platforms, has become one of the most popular video games in the world. As of March, more than 250 million players have joined, and Epic made about $2.4 billion off the game in 2018, according to the lawsuit. Especially popular is Fortnite’s Battle Royale mode, in which a hundred or so players are dropped onto an island replete with guns, traps, and building materials. Players then fight in a smaller and smaller area as a storm surrounding the island closes in. The last man, or woman—or unsettlingly anthropomorphic banana—standing wins.
About that banana: Though players can earn it and some other cosmetic avatar options, which Fortnite calls “skins,” by playing the game frequently and well, they can only obtain others through the Fortnite item shop with the game’s virtual currency, V-Bucks, which can be purchased using a credit card or gift card. The current exchange rate is about 100 V-Bucks per $1, though the rate improves the more V-Bucks you purchase. (Like some skins, players can earn V-Bucks by playing the game, but the process is time-consuming.)
Then, players spend the currency on whatever they want: the dashing sushi chef skin and the creepy Valentine’s Day limited-edition pink teddy bear skin, as well as a pickaxe shaped like a bratwurst, a hang-glider modeled after a great white shark with a laser pointer strapped to its back, and an extensive catalog of dance animations called “emotes.”
(These emotes are also the subject of lawsuits. Actor Alfonso Ribeiro, who played Carlton Banks in The Fresh Prince of Bel-Air, rap artist Terrence “2 Milly” Ferguson, and others claimed that Fortnite violated copyright law by selling their dances without their permission; those lawsuits were recently put on hold to allow their copyright applications to be processed.)
These in-game purchases are at the heart of the federal lawsuit. Because the prices of items are displayed in V-Bucks rather than dollars, the suit argues, “it is difficult for players to conceptualize how much actual money they have spent.”
For minors, who may not fully understand the value relationship between V-Bucks and real money, purchases can be made “in a rush and in the heat of the moment,” the lawsuit continues, especially if a parent has previously saved credit card information in the game. Only three purchases per Fortnite account can be refunded—ever—and the game does not include built-in parental controls to prevent such purchases. (The complaint does not mention the age of the plaintiff, referred to as Johnny Doe, nor does it say how much he spent after he downloaded Fortnite in 2018. It does say that the potential class-action claim is worth more than $5 million and argues that it should apply to minors up to age seventeen.)
For those reasons, Consalvo says, Epic may bear some fault. “I think there’s shared responsibility,” she says. “I don’t think it’s all on the parents.”
This isn’t a new problem. Game designers have been confronting it since at least the early 2000s, and especially over the last decade, with the explosion of free-to-play games on smartphones. That changed the industry’s financial model. The games themselves cost nothing to download, but the in-game purchases have proven lucrative—and contentious.
In 2014, in a settlement with the Federal Trade Commission, tech giant Apple agreed to issue $32.5 million in refunds to customers whose children had made sometimes large, unwanted purchases in App Store games with stored credit card information. That same year, Google settled with the FTC, as well, agreeing to at least $19 million in refunds. A class-action lawsuit against Facebook forced the company to issue refunds in 2016. Earlier this year, children’s rights groups asked the FTC to investigate the social media giant.
In May, Senator Josh Hawley, a Missouri Republican, introduced a bill that would ban “play-to-win microtransactions”—meaning, among other things, a purchase that “assists a user in accomplishing an achievement within the game that can otherwise be accomplished without the purchase”—in what Hawley’s bill calls “minor-oriented games.”
In a press release announcing the bill—which Hawley co-sponsored with Democrats Ed Markey of Massachusetts and Richard Blumenthal of Connecticut—Hawley likened these games to casinos: “Only the addiction economy could produce a business model that relies on placing a casino in the hands of every child in America with the goal of getting them desperately hooked.” (A British behavioral specialist has likened Fortnite to heroin, telling Bloomberg last year, “Once you are hooked, it’s hard to get unhooked.”)
Consalvo worries that a bill like this could go too far and “crush indie game developers.” The baseline market price to download most games right now is free. The only way for a new company to make money is through in-app purchases. So if you crack down too hard, you could make it impossible for new competitors to break through.
“Probably some game companies have gone too far with how they’ve monetized things,” Consalvo says, “and this is really coming back to bite them. But it’s going to impact a lot more people than just the few people who might have acted unethically.”
Sometimes, game companies will refund charges when parents complain—which Consalvo says is their ethical responsibility, since they know some of their players are children.
The Johnny Doe lawsuit doesn’t specify whether the plaintiff’s parents asked for a refund, only saying that he “wanted to cancel those purchases but was not allowed to do so under Epic’s non-refundable policy,” which limits refunds to three times only.
But on two occasions last year, Epic refunded parents who filed complaints with the N.C. Department of Justice about charges their children racked up playing Fortnite.
The N.C. DOJ received thirteen complaints about the game in 2018, according to state records. (The DOJ says it has received six complaints about Fortnite this year, but it had not provided them to the INDY by press time.)
Many of these complaints concerned things like hacked accounts, unauthorized login attempts, and so on. In one case, Epic told the state that a person complaining about fraudulent charges on their account had made repeated charges from the same IP address, so it wouldn’t refund their money. In another, Epic declined to refund $444 to a parent whose child’s account was locked for enabling an “unauthorized modification” of the software—in other words, cheating.
But in two instances, parents of minors said their kids had made purchases without their permission.
A woman from Lenoir, North Carolina, told the state DOJ on August 4, 2018, that her child spent $1,227.06 while playing Fortnite, and that once her payment information was entered into the game, it was auto-saved, meaning future purchases did not require additional verification. According to a letter attached to her report, Epic Games refunded the charges five days later.
Erika Stecklare of West Burlington, Vermont, complained to the state DOJ on February 27, 2018, that her child had charged $134.92 on her debit card without asking, telling the agency, “I cannot afford this.”
“My son was sucked in,” Stecklare told the INDY. She says the “addictive” game encouraged her son, who was eleven at the time, to continue playing and purchasing items.
“I really don’t think he could control himself,” she says.
When Stecklare tried to request a refund from Epic Games, she says, it was like hitting a brick wall. She sent multiple emails over several days but says she received only boilerplate responses.
Once she filed a complaint with the state DOJ, however, things started moving quickly, Stecklare says. The DOJ sent a letter to Epic two days later, and Epic responded within a week saying that the charges to Stecklare’s card had been refunded.
Stecklare accepts some responsibility for making her debit card accessible to her son, but she “never thought my child would do that,” she says.
She thinks Fortnite should include stronger in-game parental controls to prevent such purchases, as well as clearer pop-up messages to let kids know they are spending real money on virtual items and more responsive customer service.
Stecklare says she misses the days when you could “buy the game and be done with it.”
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