According to the Federal trade commission (FTC), a US trade watchdog, Epic Games used privacy-infringing settings and deceptive user interfaces that deceived users, including teenagers and children.
Through "inconsistent and confusing buttons", the gaming giant has caused "Fortnite" users to make purchases they did not want to make with just a single button press.
According to the FTC, the fines are the largest ever imposed for violations of the regulatory authority's rules.
The settlement consists of a fine of $275 million and refunds to consumers of $245 million.
The survival game "Fortnite", which comes in three different versions, has more than 400 million users worldwide.
It is free to download, but it is possible to buy different clothes for the characters in the game.
It has many younger users as the game does not contain any violent scenes or sexualized violence.
Epic Games said in a statement that as a result of the settlement, it has removed certain elements of the game, including the "lucky bags" that act as an in-game game.
The lucky bags contain random winnings that basically only have in-game value.
Recently, it became known that a Canadian judge has approved a lawsuit filed by parents who believe that their children have become addicted to playing "Fortnite".
The judge in Quebec made the decision after listening to arguments from three parents who describe how their children developed symptoms of "severe addiction".
One of the children must have played at least three hours a day for two years.