ACM Fines Epic Games for Unfair Practices in Fortnite: A Regulatory Analysis

Introduction

On May 14, the Netherlands Authority for Consumers and Markets (ACM) levied fines totaling €1.125 million ($1.216 million) against Epic Games International SARL for violating the Dutch Unfair Commercial Practices Act. This case, centered on Epic's practices in the popular game Fortnite, underscores the complexities of regulating digital markets and protecting vulnerable consumer groups[^1^].

 

 Overview of ACM's Decision

The ACM's decision addresses three main violations:

1. **Deceptive Scarcity Indicators:** Epic used countdown timers in Fortnite’s item shop, misleading players into believing items were available for a limited time when they were not. This created a false sense of urgency, pressuring players, especially children, into making impulsive purchases[^2^].

2. **Direct Exhortation of Children:** Epic directly encouraged children to make purchases or persuade their parents to do so through promotional videos and in-game notifications. The ACM deemed this an aggressive marketing practice[^2^].

3. **Complex Offers Under Time Pressure:** The complex and unclear presentation of offers, combined with countdown timers, distorted children’s economic behavior, leading to impulsive buying. This practice violated the professional diligence required by the Dutch Unfair Commercial Practices Act[^2^].

 

 Implications for the U.K. Regulatory Framework

The protection of children in digital spaces is a priority for U.K. regulators. The Online Safety Act 2023, for instance, addresses harmful content and controlling behaviors in digital environments. The U.K. Advertising Standards Authority (ASA) also enforces strict rules on advertising to ensure content is not appealing to children in a manipulative manner[^3^].

 

The Consumer Protection from Unfair Trading Regulations and the new Digital Markets, Competition and Consumers (DMCC) Act further enhance consumer law enforcement powers, allowing the Competition and Markets Authority (CMA) to directly penalize businesses for unfair practices. This includes imposing fines up to 10% of global revenue and awarding compensation to consumers[^4^].

 

 U.S. and EU Developments

The U.S. Federal Trade Commission (FTC) has also taken action against Epic Games. In December 2022, Epic was fined $275 million for violating the Children's Online Privacy Protection Act and ordered to pay $245 million in refunds for unintended purchases[^5^].

 

Similarly, the European Commission has launched a formal investigation into Meta Platforms Inc. for potential breaches of the Digital Services Act concerning the protection of minors on Facebook and Instagram[^6^].

 

 Practical Takeaways for the Digital Market

Lawyers advising clients in the digital market must anticipate increased regulatory scrutiny, particularly regarding practices targeting vulnerable consumers. Key considerations include:

 

- **Risk Assessment:** Conduct thorough assessments of marketing strategies to identify and mitigate risks associated with targeting vulnerable groups like children.

- **Compliance with Consumer Laws:** Ensure marketing practices comply with relevant consumer protection laws, including those related to unfair commercial practices.

- **Adapting Commercial Practices:** Proactively review and adapt commercial practices to align with evolving regulatory requirements to avoid financial penalties and reputational damage.

 

 Conclusion

The ACM's decision against Epic Games highlights the growing regulatory focus on protecting children in digital markets. As regulatory bodies in the U.K., U.S., and EU continue to enforce strict consumer protection laws, companies must rigorously review their practices to ensure compliance and safeguard vulnerable consumers.

 

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 References

 

[^1^]: ACM Decision on Epic Games, "Sanctiebesluit Fortnite," available at [ACM Decision](https://www.acm.nl/system/files/documents/sanctiebesluit-fortnite_en.pdf).

[^2^]: Summary of ACM's Epic Games Decision, available at [ACM Summary](https://www.acm.nl/en/publications/acm-imposes-fine-epic-unfair-commercial-practices-aimed-children-fortnite-game).

[^3^]: U.K. Code of Non-broadcast Advertising and Direct & Promotional Marketing, Rule 16.3.12, available at [CAP Code](https://www.asa.org.uk/codes-and-rulings/advertising-codes/non-broadcast-code.html).

[^4^]: Digital Markets, Competition and Consumers Act, details available at [DMCC Act](https://www.gov.uk/government/publications/digital-markets-competition-and-consumers-bill-2022-to-2023/digital-markets-competition-and-consumers-bill-overview).

[^5^]: FTC Action against Epic Games, available at [FTC Announcement](https://www.ftc.gov/news-events/press-releases/2022/12/ftc-orders-epic-games-pay-245-million-consumer-refunds-misleading).

[^6^]: European Commission Investigation into Meta, available at [EC Announcement](https://ec.europa.eu/commission/presscorner/detail/en/IP_24_2664).

 

Read more at: [Law360 Article](https://www.law360.com/compliance/articles/1846271?utm_source=shared-articles&utm_medium=email&utm_campaign=shared-articles?copied=1)