Epic Games: Agreement Containing Consent Order

UNITED STATES OF AMERICA

BEFORE THE FEDERAL TRADE COMMISSION

In the Matter of

EPIC GAMES, INC., a corporation.

FILE NO. 192 3203

AGREEMENT CONTAINING

CONSENT ORDER

The Federal Trade Commission (“Commission”) has conducted an investigation of certain

acts and practices of Epic Games, Inc. (“Proposed Respondent”). The Commission’s Bureau of

Consumer Protection (“BCP”) has prepared a draft of an administrative Complaint (“draft

Complaint”). BCP and Proposed Respondent, through its duly authorized officers, enter into this

Agreement Containing Consent Order (“Consent Agreement”) to resolve the allegations in the

attached draft Complaint through a proposed Decision and Order to present to the Commission,

which is also attached and made a part of this Consent Agreement.

IT IS HEREBY AGREED by and between Proposed Respondent and BCP, that:

1. The Proposed Respondent is Epic Games, Inc., a Maryland corporation with its principal

office or place of business at 620 Crossroads Blvd., Cary, North Carolina 27518.

2. Proposed Respondent neither admits nor denies any of the allegations in the Complaint,

except as specifically stated in the Decision and Order. Only for purposes of this action,

Proposed Respondent admits the facts necessary to establish jurisdiction.

3. Proposed Respondent waives:

a. Any further procedural steps;

b. The requirement that the Commission’s Decision contain a statement of findings of fact

and conclusions of law; and

c. All rights to seek judicial review or otherwise to challenge or contest the validity of the

Decision and Order issued pursuant to this Consent Agreement.

4. This Consent Agreement will not become part of the public record of the proceeding unless

and until it is accepted by the Commission. If the Commission accepts this Consent Agreement,

it, together with the draft Complaint, will be placed on the public record for 30 days and

information about them publicly released. Acceptance does not constitute final approval, but it

serves as the basis for further actions leading to final disposition of the matter. Thereafter, the

Commission may either withdraw its acceptance of this Consent Agreement and so notify

Proposed Respondent, in which event the Commission will take such action as it may consider

appropriate, or issue and serve its Complaint (in such form as the circumstances may require)

and decision in disposition of the proceeding, which may include an Order. See Section 2.34 of

the Commission’s Rules, 16 C.F.R. § 2.34 (“Rule 2.34”).

5. If this agreement is accepted by the Commission, and if such acceptance is not subsequently

withdrawn by the Commission pursuant to Rule 2.34, the Commission may, without further

notice to Proposed Respondent: (1) issue its Complaint corresponding in form and substance

with the attached draft Complaint and its Decision and Order; and (2) make information about

them public. Proposed Respondent agrees that service of the Order may be effected by its

publication on the Commission’s website (ftc.gov), at which time the Order will become final.

See Rule 2.32(d). Proposed Respondent waives any rights it may have to any other manner of

service. See Rule 4.4.

6. When final, the Decision and Order will have the same force and effect and may be altered,

modified, or set aside in the same manner and within the same time provided by statute for other

Commission orders.

7. The Complaint may be used in construing the terms of the Decision and Order. No

agreement, understanding, representation, or interpretation not contained in the Decision and

Order or in this Consent Agreement may be used to vary or contradict the terms of the Decision

and Order.

8. Proposed Respondent agrees to comply with the terms of the proposed Decision and Order

from the date that Proposed Respondent signs this Consent Agreement. Proposed Respondent

understands that it may be liable for civil penalties and other relief for each violation of the

Decision and Order after it becomes final.

EPIC GAMES, INC. FEDERAL TRADE COMMISSION

By:___________________ By:____________________

Name: James Doty

Title: Sam Jacobson

Epic Games, Inc. Naomi Takagi

Attorneys, Bureau of Consumer Protection

Date:__________________

APPROVED:

________________________

Malini Mithal

Associate Director

Division of Financial Practices

________________________

Samuel A.A. Levine

Director

Bureau of Consumer Protection

Date:__________________

_______________________

Christopher Olsen

Libby Weingarten

Wilson Sonsini Rosati & Goodrich

Attorneys for Proposed Respondent

192-3203

UNITED STATES OF AMERICA

BEFORE THE FEDERAL TRADE COMMISSION

COMMISSIONERS: Lina M. Khan, Chair

Rebecca Kelly Slaughter

Christine S. Wilson

Alvaro M. Bedoya

In the Matter of

EPIC GAMES, INC., a corporation.

DECISION AND ORDER

DOCKET NO. C-

DECISION

The Federal Trade Commission (“Commission”) initiated an investigation of certain acts and

practices of the Respondent named in the caption. The Commission’s Bureau of Consumer

Protection (“BCP”) prepared and furnished to Respondent a draft Complaint. BCP proposed to

present the draft Complaint to the Commission for its consideration. If issued by the

Commission, the draft Complaint would charge the Respondent with violations of the Federal

Trade Commission Act.

Respondent and BCP thereafter executed an Agreement Containing Consent Order (“Consent

Agreement”). The Consent Agreement includes: 1) statements by Respondent that it neither

admits nor denies any of the allegations in the Complaint, except as specifically stated in this

Decision and Order, and that only for purposes of this action, it admits the facts necessary to

establish jurisdiction; and 2) waivers and other provisions as required by the Commission’s

Rules.

The Commission considered the matter and determined that it had reason to believe that

Respondent has violated the Federal Trade Commission Act, and that a Complaint should issue

stating its charges in that respect. The Commission accepted the executed Consent Agreement

and placed it on the public record for a period of 30 days for the receipt and consideration of

public comments. The Commission duly considered any comments received from interested

persons pursuant to Section 2.34 of its Rules, 16 C.F.R. § 2.34. Now, in further conformity with

the procedure prescribed in Rule 2.34, the Commission issues its Complaint, makes the

following Findings, and issues the following Order:

Findings

1. The Respondent is Epic Games, Inc., a Maryland corporation with its principal office or

place of business at 620 Crossroads Blvd., Cary, North Carolina 27518.

2. The Commission has jurisdiction over the subject matter of this proceeding and over the

Respondent, and the proceeding is in the public interest.

ORDER

Definitions

For purposes of this Order, the following definitions apply:

A. “Account Holder” means an individual or entity that is responsible for paying for

Charges associated with an account to which Respondent may bill Charges.

B. “Application” means any software application that can be installed on a computing

device, including a personal computer, mobile device, or video game console.

C. “Application Activity” or “Application Activities” means any user conduct within an

Application, including the acquisition of currency, goods, services, or other Applications.

D. “Charge” means a charge associated with an Application Activity billed by Respondent.

E. “Clear and conspicuous” means that a required disclosure is difficult to miss (i.e., easily

noticeable) and easily understandable by ordinary consumers, including in all of the

following ways:

1. In any communication that is solely visual or solely audible, the disclosure must be

made through the same means through which the communication is presented. In any

communication made through both visual and audible means, such as a television

advertisement, the disclosure must be presented simultaneously in both the visual and

audible portions of the communication even if the representation requiring the

disclosure (“triggering representation”) is made through only one means.

2. A visual disclosure, by its size, contrast, location, the length of time it appears, and

other characteristics, must stand out from any accompanying text or other visual

elements so that it is easily noticed, read, and understood.

3. An audible disclosure, including by telephone or streaming video, must be delivered

in a volume, speed, and cadence sufficient for ordinary consumers to easily hear and

understand it.

4. In any communication using an interactive electronic medium, such as the Internet or

software, the disclosure must be unavoidable.

5. The disclosure must use diction and syntax understandable to ordinary consumers and

must appear in each language in which the triggering representation appears.

6. The disclosure must comply with these requirements in each medium through which

it is received, including all electronic devices and face-to-face communications.

7. The disclosure must not be contradicted or mitigated by, or inconsistent with,

anything else in the communication.

8. When the representation or sales practice targets a specific audience, such as children,

the elderly, or the terminally ill, “ordinary consumers” includes reasonable members

of that group.

F. “Express, Informed Consent” means, upon being presented with options to provide or

withhold consent, an affirmative act communicating informed authorization of a Charge,

made prior to and proximate to an Application Activity for which there is a Charge and to

Respondent’s Clear and Conspicuous disclosure of all material information related to the

billing, including:

1. If consent is sought for a specific Charge: (a) the Application Activity associated with

the Charge; (b) the specific amount of the Charge; and (c) the account that will be

billed for the Charge; or

2. If consent is sought for potential future Charges: (a) the scope of the Charges for

which consent is sought, including the duration and Applications to which consent

applies; (b) the account that will be billed for the Charge; and (c) method(s) through

which the Account Holder can revoke or otherwise modify the scope of consent on

the device, including an immediate means to access the method(s).

Provided that the solicitation of the “affirmative act” and the disclosure of the

information in F.1 and F.2 must be reasonably calculated to ensure that the person

providing Express, Informed Consent is the Account Holder.

Provided also that if Respondent obtains Express, Informed Consent to potential future

Charges as set forth in definition F.2 above, it must do so a minimum of once per device.

Provided also that Express, Informed Consent may not be obtained through a user

interface that has the effect of subverting or impairing user autonomy, decision-making,

or choice.

Provisions

IT IS ORDERED that Respondent and its officers, agents, and employees, and all other

persons in active concert or participation with any of them, who receive actual notice of this

Order, whether acting directly or indirectly, are restrained and enjoined for the term of this Order

from billing an Account Holder for any Charge without having obtained Express, Informed

Consent for the Charge. If Respondent seeks and obtains Express, Informed Consent to billing

potential future Charges (other than future royalty payments owed by the user based on revenue

the user derives from use of an Application), Respondent must provide the Account Holder with

a simple mechanism to revoke consent at any time. Such mechanism must not be difficult,

costly, confusing, or time consuming, and must be at least as simple as the mechanism the

consumer used to initiate the Charge(s).

II.

IT IS FURTHER ORDERED that Respondent and its officers, agents, employees, and

attorneys, and all other persons in active concert or participation with any of them, who receive

actual notice of this Order, whether acting directly or indirectly, in connection with the

advertising, marketing, promoting, offering for sale, or selling of any goods or services, are

permanently restrained and enjoined from denying, temporarily or permanently, a consumer’s

access to or use of his or her account, including any paid-for goods or services, for reasons that

include the consumer’s dispute of a Charge.

III. Monetary Relief

IT IS FURTHER ORDERED that:

A. Respondent must pay to the Commission $245,000,000, which its undersigned counsel

holds in escrow for no purpose other than payment to the Commission.

B. Such payment must be made within 8 days of the effective date of this Order by

electronic fund transfer in accordance with instructions provided by a representative of

the Commission.

IV. Additional Monetary Provisions

IT IS FURTHER ORDERED that:

A. Respondent relinquishes dominion and all legal and equitable right, title, and interest in

all assets transferred pursuant to this Order and may not seek the return of any assets.

B. The facts alleged in the Complaint will be taken as true, without further proof, in any

subsequent civil litigation by or on behalf of the Commission to enforce its rights to any

payment pursuant to this Order, such as a nondischargeability complaint in any

bankruptcy case.

C. The facts alleged in the Complaint establish all elements necessary to sustain an action by

or on behalf of the Commission pursuant to Section 523(a)(2)(A) of the Bankruptcy

Code, 11 U.S.C. § 523(a)(2)(A), and this Order will have collateral estoppel effect for

such purposes.

D. All money paid to the Commission pursuant to this Order may be deposited into a fund

administered by the Commission or its designee to be used for relief, including consumer

redress and any attendant expenses for the administration of any redress fund. If a

representative of the Commission decides that direct redress to consumers is wholly or

partially impracticable or money remains after redress is completed, the Commission may

apply any remaining money for such other relief (including consumer information

remedies) as it determines to be reasonably related to Respondent’s practices alleged in

the Complaint. Any money not used is to be deposited to the U.S. Treasury. Respondent

has no right to challenge any activities pursuant to this Provision.

E. In the event of default on any obligation to make payment under this Order, interest,

computed as if pursuant to 28 U.S.C. § 1961(a), shall accrue from the date of default to

the date of payment. In the event such default continues for 10 days beyond the date that

payment is due, the entire amount will immediately become due and payable.

F. Each day of nonpayment is a violation through continuing failure to obey or neglect to

obey a final order of the Commission and thus will be deemed a separate offense and

violation for which a civil penalty shall accrue.

G. Respondent acknowledges that its Taxpayer Identification Number (Social Security or

Employer Identification Number), which Respondent has previously submitted to the

Commission, may be used for collecting and reporting on any delinquent amount arising

out of this Order, in accordance with 31 U.S.C. § 7701.

V. Customer Information

IT IS FURTHER ORDERED that Respondent must directly or indirectly provide sufficient

customer information to enable the Commission to efficiently administer consumer redress to

Account Holders to whom Respondent billed a Charge without Express, Informed Consent, and

Account Holders whom Respondent denied access to paid-for goods or services for disputing

any Charge. If a representative of the Commission requests in writing any information related to

redress, Respondent must provide it, in the form prescribed by the Commission representative,

within 14 days.

VI. Acknowledgments of the Order

IT IS FURTHER ORDERED that Respondent obtains acknowledgments of receipt of this

Order:

A. Respondent, within 10 days after the effective date

of this Order, must submit to the

Commission an acknowledgment of receipt of this Order sworn under penalty of perjury.

B. For 20 years after the issuance date of this Order, Respondent must deliver a copy of this

Order to: (1) all principals, officers, directors, and LLC managers and members; (2) all

employees having managerial responsibilities for conduct related to the subject matter of

the Order and all agents and representatives who participate in conduct related to the

subject matter of the Order; and (3) any business entity resulting from any change in

structure as set forth in the Provision titled Compliance Report and Notices. Delivery

must occur within 10 days after the effective date of this Order for current personnel. For

all others, delivery must occur within 10 days of when they assume their responsibilities.

C. From each individual or entity to which Respondent delivered a copy of this Order,

Respondent must obtain, within 30 days, a signed and dated acknowledgment of receipt

of this Order.

VII. Compliance Report and Notices

IT IS FURTHER ORDERED that Respondent make timely submissions to the

Commission:

A. One year after the issuance date of this Order, Respondent must submit a compliance

report, sworn under penalty of perjury, in which:

1. Respondent must: (a) identify the primary physical, postal, and email address and

telephone number, as designated points of contact, which representatives of the

Commission, may use to communicate with Respondent; (b) identify all of

Respondent’s businesses by all of their names, telephone numbers, and physical,

postal, email, and Internet addresses; (c) describe the activities of each business,

including the goods and services offered, purchase flows, billing practices; (d)

describe in detail whether and how Respondent is in compliance with each Provision

of this Order, including a discussion of all material changes Respondent made to

comply with the Order; and (e) provide a copy of each Acknowledgment of the Order

obtained pursuant to this Order, unless previously submitted to the Commission.

B. For 10 years after the issuance date of this Order, Respondent must submit a compliance

notice, sworn under penalty of perjury, within 14 days of any change in the following:

1. Respondent must submit notice of any change in: (a) any designated point of contact;

or (b) the structure of Respondent or any entity that Respondent has any ownership

interest in or controls directly or indirectly that may affect compliance obligations

arising under this Order, including: creation, merger, sale, or dissolution of the entity

or any subsidiary, parent, or affiliate that engages in any acts or practices subject to

this Order.

C. Respondent must submit notice of the filing of any bankruptcy petition, insolvency

proceeding, or similar proceeding by or against Respondent within 14 days of its filing.

D. Any submission to the Commission required by this Order to be sworn under penalty of

perjury must be true and accurate and comply with 28 U.S.C. § 1746, such as by

concluding: “I declare under penalty of perjury under the laws of the United States of

America that the foregoing is true and correct. Executed on: _____” and supplying the

date, signatory’s full name, title (if applicable), and signature.

E. Unless otherwise directed by a Commission representative in writing, all submissions to

the Commission pursuant to this Order must be emailed to [email protected] or sent by

overnight courier (not the U.S. Postal Service) to: Associate Director for Enforcement,

Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue

NW, Washington, DC 20580. The subject line must begin: In re Epic Games, Inc.,

[C or D docket number].

VIII. Recordkeeping

IT IS FURTHER ORDERED that Respondent must create certain records for 10 years and

retain each such record for 5 years. Specifically, Respondent, for any business that Respondent is

a majority owner or controls directly or indirectly, must create and retain the following records:

A. accounting records showing the revenues from all goods or services sold, the costs

incurred in generating those revenues, and resulting net profit or loss;

B. personnel records showing, for each person providing services in relation to any aspect of

the Order, whether as an employee or otherwise, that person’s: name; addresses;

telephone numbers; job title or position; dates of service; and (if applicable) the reason

for termination;

C. copies or records of all consumer complaints and refund requests concerning the subject

matter of the Order, whether received directly or through any domestic government

regulatory authority;

D. records of any market, behavioral, or psychological research, or user or customer testing

performed by or at the direction of Respondent, including any A/B or multivariate

testing, copy testing, surveys, focus groups, customer interviews, clickstream analysis,

eye or mouse tracking studies, heat maps, or session replays or recordings;

E. for 5 years from the date received, copies of all subpoenas and other communications

with domestic law enforcement, if such communication relate to Respondent’s

compliance with this Order;

F. for 5 years from the date created or received, all custodial records for individuals with

managerial responsibility for digital purchasing and user interface; and

G. all records necessary to demonstrate full compliance with each provision of this Order,

including all submissions to the Commission.

IX. Compliance Monitoring

IT IS FURTHER ORDERED that, for the purpose of monitoring Respondent’s

compliance with this Order:

A. Within 10 days of receipt of a written request from a representative of the Commission,

Respondent must: submit additional compliance reports or other requested information,

which must be sworn under penalty of perjury, and produce records for inspection and

copying.

B. For matters concerning this Order, representatives of the Commission are authorized to

communicate directly with Respondent. Respondent must permit representatives of the

Commission to interview anyone affiliated with Respondent who has agreed to such an

interview. The interviewee may have counsel present.

C. The Commission may use all other lawful means, including posing through its

representatives as consumers, suppliers, or other individuals or entities, to Respondent or

any individual or entity affiliated with Respondent, without the necessity of identification

or prior notice. Nothing in this Order limits the Commission’s lawful use of compulsory

process, pursuant to Sections 9 and 20 of the FTC Act, 15 U.S.C. §§ 49, 57b-1.

X. Order Effective Dates

IT IS FURTHER ORDERED that this Order is final and effective upon the date of its

publication on the Commission’s website (ftc.gov) as a final order. This Order will terminate 20

years from the date of its issuance (which date may be stated at the end of this Order, near the

Commission’s seal), or 20 years from the most recent date that the United States or the

Commission files a complaint (with or without an accompanying settlement) in federal court

alleging any violation of this Order, whichever comes later; provided, however, that the filing of

such a complaint will not affect the duration of:

A. Any Provision in this Order that terminates in less than 20 years; and

B. This Order if such complaint is filed after the Order has terminated pursuant to this

Provision.

Provided, further, that if such complaint is dismissed or a federal court rules that the Respondent

did not violate any provision of the Order, and the dismissal or ruling is either not appealed or

upheld on appeal, then the Order will terminate according to this Provision as though the

complaint had never been filed, except that the Order will not terminate between the date such

complaint is filed and the later of the deadline for appealing such dismissal or ruling and the date

such dismissal or ruling is upheld on appeal.

By the Commission.

April Tabor

Secretary

SEAL:

ISSUED: