Editor’s Note: This was originally written earlier in 2023 for the one year anniversary of Epic Games’ purchase of Bandcamp and published in 5 Mag Issue 206. It was not posted online as events moved quickly, particularly after an appeal court mostly confirmed a lower court’s judgment in favor of Apple in Epic Games’ lawsuit over the App Store. After Epic’s sale of Bandcamp in September, it’s being posted here for reference purposes.
The company that owned Bandcamp and has taken on Big Tech’s dominance of app payments was hit with a $245 million penalty for exploiting customers violating rules protecting children’s data.
News of the fine came via a finalized settlement between Epic Games, which purchased Bandcamp in 2022, and the US Federal Trade Commission.
Epic Games “deployed a variety of design tricks known as dark patterns” which were engineered to compel users to make unintended in-game purchases inside Epic’s blockbuster game Fortnite, per the FTC. According to a release, Fortnite utilized these “counterintuitive, inconsistent, and confusing button configurations” known in the industry as “dark patterns” to cause users to make unintended purchases while clicking through.
According to the FTC’s complaint, Epic “locked the accounts of customers who disputed unauthorized charges with their credit card companies.” The “free” game Fortnite, CNET claims, “made a killing off accidental charges.” The initial complaint alleged that as a result of Epic’s “matchmaking children and teens with strangers… children and teens have been bullied, threatened and harassed within Fortnite, including harassment of a sexual nature. Children and teens have also been exposed to dangerous and psychologically traumatizing issues, such as suicide and self-harm, through Fortnite. And the few relevant privacy and parental controls Epic has introduced over time have not meaningfully alleviated these harms or empowered players to avoid them.”
Fortnite, still marketed as a free game, ‘made a killing off accidental charges,’ leading to one of the largest fines the FTC has ever issued against an American corporation.
The initial FTC complaint alleged that “millions” of consumers complained about Epic’s billing practices and the uses of dark patterns” designed to fool, confuse or manipulate users into making unwanted purchases. One parent referenced by the FTC claimed they had authorized a one time charge for their 11 year old son to download the game, only to find Epic had not erased their credit card number. Their son quickly rang up $140 of in-game purchases in the next 8 days.
The FTC alleged that in Spring 2018 Epic executives and managers debated whether or not to add a simple confirmation page to purchases, with several quoted as supporting the action (and admitting they themselves were “a little paranoid of bumping the controller” and accidentally purchasing an item) but worried about introducing too much “friction” which could reduce the number of “impulse purchases.”
The $245 million will be used to provide refunds to customers who said they made accidental purchases due to Epic’s use of dark patterns.
In a separate settlement in December, Epic agreed to pay a $275 million penalty to settle FTC allegations that Epic violated the Children’s Online Privacy Protection Act Rule. The FTC alleged that Epic launched Fortnite — a game targeted mostly at children — with “no parental controls and minimal privacy settings.” The $275 million was described by the FTC as “record-shattering” — the largest ever fine for a violation of FTC rules (which is probably part of the problem.)
In a statement, Epic claimed they were now “moving beyond long-standing industry practices” and would pay both fines to “resolve concerns” around Epic’s payment process and “children’s privacy.”
“We accepted this agreement because we want Epic to be at the forefront of consumer protection and provide the best experience for our players,” the statement reads. “Over the past few years, we’ve been making changes to ensure our ecosystem meets the expectations of our players and regulators, which we hope will be a helpful guide for others in our industry.”
From the very beginning, Epic framed their acquisition of Bandcamp in terms of their ongoing battle with the app stores. Within months of the sale, Bandcamp also entered into litigation against Google.
Quite apart from their punishment by the FTC, Epic is currently engaged in litigation against Google and Apple against those companies’ policing of payment options of software available in their app stores. Epic’s first lawsuit against Apple was decided mostly in Apple’s favor — Epic appealed, which was decided again in Apple’s favor on April 24. The case against Google is scheduled for trial this November.
Within months of Epic’s purchase of Bandcamp last March, Bandcamp also entered into litigation against Google, claiming that their app store fees would force price increases on consumers — that is, people buying records — and would force Bandcamp/Epic to either remove all e-commerce functionality or compel them to shut it down altogether.
Throughout these lawsuits, Epic Games has presented itself as a crusader on behalf of “creators” in their suits against Google and Apple. “Fair and open platforms are critical to the future of the creator economy,” a press release issued on March 3 2022 and which announced the sale of Bandcamp to Epic stated.
“Epic and Bandcamp share a mission of building the most artist friendly platform that enables creators to keep the majority of their hard-earned money.”
From the very beginning, the maker of Fortnite framed their new acquisition in terms of their ongoing battle with the app stores.
To be clear, other Big Tech companies have faced similar charges to what Epic was penalized for — engaging in deceptive practices, the use of dark patterns to juice sales or breaking federal guidelines on marketing to children. That’s why artists and creators deal with those companies with the exercise of some caution. Few imagined that the new parent company of the site they use to sell records would confess to engaging in the same behavior.
Bandcamp is an absolutely irreplaceable cog in the online music ecosystem right now — there is literally no other specialized place providing the merch, vinyl, digital and other services they do. If Bandcamp goes down, there is no “Bandcamp #2” waiting in the wings that we can all move to. Given the low-margin nature of acting as an e-commerce middleman specializing in mp3 and physical merch sales, there might not ever be another company like Bandcamp, or at least few investors willing to fund one.
We need Bandcamp to be different than the other Silicon Valley hucksters and manipulative salesmen who have profited from the arts while bankrupting artists over the last 20 years. Its now former owners, at least, don’t seem to be.
[…] in their lawsuits against Apple and Google parent company Alphabet over their app stores. Bandcamp immediately became enmeshed in the litigation over app store fees, threatening to pass on additional fees to customers or cease mobile sales […]