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DARK PATTERNS AND ITS IMPACT ON BUSINESSES

DARK PATTERNS

India has one of the world's largest internet bases which makes it a crucial market for global online platforms. With the increasing online population, there is also an increase in online fraud and deceit against various customers in the form of dark patterns. Keeping the origin of Dark Patterns in mind, the Ministry of Consumer Affairs, Food and Public Distribution, Government of India have recently established a 17-member task force that could delve into and develop guidelines for consumer protection to address the issue of Dark Patterns. The Ministry had also taken inputs from the Advertising Standards Council of India (ASCI) and consulted with various stakeholders like E-Commerce companies on the issuance of the guidelines that could curb the increasing menace of the dark patterns in India.

Accordingly, in the exercise of powers conferred under section 18 of the Consumer Protection Act, 2019, the Central Consumer Protection Authority (Ministry of Consumer Affairs) issued the “Guidelines for Prevention and Regulation of Dark Patterns, 2023”. According to these guidelines, "Dark Patterns" shall mean any practices or deceptive design patterns using UI/UX (user interface/user experience) interactions on any platform; designed to mislead or trick users into doing something they originally did not intend or want to do; by subverting or impairing the consumer autonomy, decision making or choice; amounting to misleading advertisement or unfair trade practice or violation of consumer rights.[1]

The guidelines list the following dark patterns:

False urgency: Falsely stating or implying the sense of urgency or scarcity to mislead a user/consumer into making an immediate purchase or taking immediate action. This leads to a purchase made by manipulating user decisions by showing false popularity of a product or more limited quantities of a product than they actually are.

Basket sneaking: Additional items such as payments to charity, products, or services are added at the time of checkout without the consent of the user. For example, the automatic addition of travel insurance while purchasing flight or train tickets.

Confirm shaming: Using a phrase, video, audio, or any such means that creates a sense of fear, shame, or guilt in the mind of the user to manipulate them into continuing a particular service or buying a product. For example, organizations such as Ketto or adding a charity in the users' cart with the phrase “Charity is for the rich, I don’t care”.

Forced action: Forcing a user to take an action that would require them to buy an additional good or service to buy the product or service originally intended by the user.

Subscription trap: This kind of dark pattern includes making the cancellation of a subscription a very lengthy and complex procedure, hiding the cancellation option for a subscription, forcing a user to provide payment details to enable auto-debit for subscriptions, and making the instructions for cancellation confusing and ambiguous.

Interface interference: Manipulates the user into making a decision favorable for the platform by obscuring the relevant, important information and highlighting only specific instructions.

Bait and switch: Advertises a particular outcome based on users' actions but deceptively serves an alternative outcome.

Drip pricing: Elements of prices are not revealed upfront or are revealed post confirmation of the purchase and a higher amount is charged than what was disclosed at the time of the checkout, advertising a product or service as free and not disclosing the other requirements or conditions attached to it or preventing a person from using a service already paid by him unless an additional purchase is made.

Disguised advertisement: Masking advertisements or showing false advertisements.

Nagging: An overload of requests, options, and interruptions are posed to the user.

Trick Question: Deliberate use of confusing or vague language like confusing wording, double negatives, or other similar tricks, in order to misguide or misdirect a user from taking desired action or leading consumer to take a specific response or action.

SaaS Billing : The process of generating and collecting payments from consumers on a recurring basis in a software as a service (SaaS) business model by exploiting positive acquisition loops in recurring subscriptions to get money from users as surreptitiously as possible.

Rogue Malwares: Using a ransomware or scareware to mislead or trick user into believing there is a virus on their computer and aims to convince them to pay for a fake malware removal tool that actually installs malware on their computer.

IMPLICATIONS OF THE EXISTING LAWS ON DATA PATTERNS

The introduction of the draft guideline is a significant action for the protection of the interests of internet users however there has been an existing framework for prohibiting the dark patterns in the form of various legislation like the Consumer Protection Act 2019, Guidelines for Prevention of Misleading Advertisements 2022, the Digital Personal Data Protection Act 2023 (“DPDP”), etc. Although the DPDP Act, 2023 has been notified in the official Gazette of India on 11.08.2023, the date on which this Act will come into effect has yet to be notified.

The existing legislation although does not specifically mention dark patterns, however, it offers protection against unfair trade practices and misleading advertisements by using similar tactics, particularly in the realm of Data Protection as well as Consumer rights. Some of the existing legislation are as follows-

Digital Personal Data Protection Act, 2023

The Digital Personal Data Protection Act, of 2023, unequivocally decrees that individuals provide their free and clear consent before their data is processed unless it is being used for one of the designated "legitimate uses." A notice outlining the purpose of processing the requested data and outlining the rights of the individual—among which is the ability to withdraw consent at any time—must be included with the request for consent. In addition, this Act stipulates that obtaining consent from a data fiduciary should not be more difficult than withdrawing consent. As a result, a Data Fiduciary may only use personal information for the purposes for which it was collected and cannot "hold hostage" an individual's consent or data.

Within the provisions of the newly introduced guidelines, the businesses will have to audit their user interfaces, eliminate any dark patterns they may be employing, safeguard personal information, utilize it only for "legitimate purposes," and obtain users' agreement in clear language through explicit affirmative action.

Keeping a balance between user privacy and data access for personalization may prove to be the most difficult task. Additionally, businesses will need to spend more money to make sure that their individualized marketing complies with the strict data protection guidelines set forth by the Act.

The Consumer Protection Act, 2019

According to the Consumer Protection Act, 2019 the ‘consumer rights’[2] include-

the right to be protected against the marketing of goods, products, or services which are hazardous to life and property;

the right to be informed about the quality, quantity, potency, purity, standard, and price of goods, products, or services, as the case may be, to protect the consumer against unfair trade practices;

the right to be assured, wherever possible, access to a variety of goods, products, or services at competitive prices;

the right to be heard and to be assured that consumer's interests will receive due consideration at appropriate fora;

the right to seek redressal against unfair trade practices restrictive trade practices or unscrupulous exploitation of consumers; and

(vi) the right to consumer awareness;

Forcing or manipulating a consumer into making choices that are against their interest amounts to unfair trade practices as defined under section 47 of the Consumer Protection Act, 2019 For the purpose of regulating the cases concerning unfair trade practices, violation of the rights of the consumers and misleading advertisements, the Central Government formed the Central Consumer Protection Authority (“CCPA”).

CCPA has been established as a regulatory body within the provisions of the Consumer Protection Act, 2019. This regulatory body protects the rights of the consumers and takes necessary steps to ensure enforcement and protection of consumer rights such as:

Conducting inquiries and investigations into violations of consumer rights and unfair trade practices on receiving a Complaint or Suo moto.

Upon investigation, if the CCPA is satisfied that the rights of the consumers have been infringed or amount to unfair trade practices, the authority can directly to pass an order for the removal of such product or discontinuation of the service.

Granting compensation or reimbursement to the consumer for the price paid for the product or service.

Section 88 of the Consumer Protection Act, 2019 imposes a penalty for non-compliance with the direction of the Central Authority with an imprisonment for a term which may extend up to 6 months or a fine extending up to 20 lakh rupees, or both.

Section 89 of the Consumer Protection Act, 2019 punishes for false or misleading advertisement which is prejudicial to the interest of the consumers with imprisonment for terms up to 2 years and a fine extending up to ten lakh rupees and for every subsequent offense, imprisonment up to 5 years and a fine of up to fifty lakh rupees.

GUIDELINES FOR PREVENTION OF MISLEADING ADVERTISEMENTS AND ENDORSEMENTS FOR MISLEADING ADVERTISEMENTS, 2022[3]

Section 21 of the Consumer Protection Act, 2019 sets forth requirements for "non-misleading and valid advertisements" and "bait advertisements," which draw customers by lowering the cost of a good or service. The Central Consumer Protection Agency released Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022. According to the Guidelines, advertisements cannot be referred to as "free" if the customer must pay for the packing or delivery, purchase another item at a higher cost to take advantage of the offer, or purchase a lesser quality or quantity in order to take advantage of the offer.

THE ADVERTISING STANDARDS COUNCIL OF INDIA (“ASCI”) GUIDELINES FOR ONLINE DECEPTIVE DESIGN PATTERNS IN ADVERTISING[4]

Online Deceptive Design Patterns can also be described as 'dark patterns'. As stated hereinabove, these patterns refers to a wide range of practices in online user interfaces that manipulate customers into making choices that are not in their best interest.

Chapter 1 of the ASCI code mandates ads to be honest and not abuse the trust and lack of expertise of the consumers. It should not be misleading in any way and there should be no ambiguity in the language of the advertisements. The ACSI guidelines are to be applied to all digital advertising platforms. It recognizes the 4 key dark patterns such as (i) Drip pricing, (ii) Bait and Switch, (iii) False urgency and (iv) Disguised Ads.

IMPACT OF THESE GUIDELINES

Who will be impacted?

Sellers, advertisers, and all platforms that "systematically" offer goods and services in India will be subject to the Draft Guidelines. Interestingly, the Draft Guidelines apply not only to companies established in India but also to companies established abroad that sell goods or services to Indian nationals.

What will be the impact?

At the outset, the Ministry’s attempt to regulate the dark patterns should be appreciated, however, the introduction of these guidelines can impact various stakeholders as well as businesses operating in the global setup. The Dark Patterns can have an impact on the e-commerce industry as well as the fintech industry. The E-Commerce industry is constantly evolving and the introduction of these guidelines on dark patterns can pose a challenge. One of the significant impacts for such industries will be to amend their user interfaces and make them more consumer-friendly so that the menace of dark patterns can be controlled and regulated. However, the whole process can be costly as well as time-consuming which can discourage the budding e-commerce businesses as well as the existing businesses.

It is significant to mention herein that Asia Internet Coalition (“AIC”) which represents tech giants such as Google, Apple, Amazon, and Twitter has categorically suggested that the introduction of such guidelines can deteriorate the growth of the country's digital economy and urged the Government of India to contemplate the existing self-regulatory framework as the primary measure to restrict the use of dark patterns. The industry group also said online platforms are already regulated under the various existing laws. The group stated that while online platforms in India qualify as online intermediaries and are regulated under the Information Technology Act 2000, e-commerce platforms are administered under the Consumer Protection Act 2019 rules. However, clause 6 of the Draft Guidelines specifically provides that the provisions contained in these guidelines shall be in addition to and not in derogation of the existing laws and regulations, hence the worries of AIC can be squarely covered.

Nonetheless, the e-commerce or fintech industries can take the following steps to improve their practice and to be in line with the newly introduced guidelines on dark patterns:

The businesses can create communication and systems that will respect the autonomy of the users and improve transparency which will enable the consumers to make well-informed choices;

With the introduction of the guidelines, the Businesses can teach their Customers how to spot dark patterns. Industry standards for dark pattern-free user interfaces should be developed;

To maintain compliance, businesses have to incorporate consent documentation or pop-up notifications on digital platforms;

Businesses should provide thorough and personalized user experiences on digital platforms;

Implementing encryption, multi-factor authentication, and regular security precautions which can also go a long way in improving the user interfaces;

Businesses should also communicate their data privacy practices and attain explicit consent for the collection of the data;

REDRESSAL MECHANISM FOR AFFECTED CONSUMERS

The newly introduced guidelines do not provide any provisions for filing complaints against the dark patterns. However, the existing regulation such as the Consumer Protection Act 2019 and the DPDP Act 2023 provides the provision for regulating unfair trade practices by any organizations who are dealing in both online and offline interface.

Complaint under the Consumer Protection Act, 2019- Under Section 9(v) of the Consumer Protection Act, 2019, the consumer has the right to seek redressal against Unfair Trade Practices or restrictive trade practices.

Consumers can file a complaint against unfair trade practices or misleading information and advertisements before the Consumer Commission as prescribed under the Consumer Protection Act, 2019. The provisions of the 2019 Act provide for the establishment of Consumer Commissions at various levels which enables the individual complainant or a group of complainants to approach these commissions and register their complaint against such unfair practices and misleading advertisements. As stated above, these Commissions can impose punishments for false or misleading advertisements within the scope of section 89 of the Consumer Protection Act, 2019.

Complaint to Central Consumer Protection Authority- In case, a large set of consumers are being affected through practices such as violation of consumer rights such as unfair trade practices, or false and misleading advertisements, then such a complaint can be forwarded to the District Collector or the Commissioner of regional officer or the Central Authority. Moreover, under Section 21 of the Consumer Protection Act 2019, the Central Authority also has the power to issue penalties against false and misleading advertisements.

Complaint under DPDP Act 2023- The DPDP Act 2023 provides that the consent given by the Data Principal shall be free, specific informed, unconditional, and with a clear affirmative action. The Data Fiduciary under the newly formed act should ensure that the data of the consumers is not breached and misused. The Data Principal under Section 27 of the Act has the right to approach the Data Protection Board and file a complaint in case the Data Principal feels that its data has been misused and breached by the Data Fiduciary. However, it is significant to mention that the Act has not come into effect yet.

CONCLUSION

Dark patterns are a form of misleading design that can harm consumers. Attentiveness of the different types of dark patterns and taking steps to protect the business and consumers can aid in reducing the risk by focusing on offering consumers the information and experience needed to make fully informed decisions. India has already geared in implementing the laws and procedures that can guide customers and people around the nation to not fall into the trap of dark patterns as well as a way to protect their data. Since the area is comparatively new, more jurisprudence will be required to ascertain whether the implementation of such guidelines is actually affecting the ease of doing business in India.

Up until now, only the fields of marketing and advertising have been able to control the psychological and behavioral inclinations of their customers through online manipulation. The draft guidelines now aim to broaden the regulatory scope to address more consumer concerns. However, it remains to be seen how the draft guidelines will supplement the current situation without causing regulatory overlap and arbitrage, given that the DPDP Act and the forthcoming Digital India Act have the potential to protect users from dark patterns.

Footnotes

[1] https://www.mondaq.com/india/dodd-frank-consumer-protection-act/1379670/understanding-dark-patterns-guidelines-for-consumer-protection#:~:text=The%20term%20'Dark%20Patterns'%20has,by%20subverting%20or%20impairing%20the

[2] https://www.indiacode.nic.in/bitstream/123456789/15256/1/a2019-35.pdf

[3] https://consumeraffairs.nic.in/sites/default/files/file-uploads/latestnews/The%20Guidelines%20for%20Prevention%20and%20Regulation%20of%20Dark%20Patterns%2C%202023.pdf

[4] https://www.ascionline.in/wp-content/uploads/2023/05/Guidelines-for-Online-Deceptive-Design-Patterns-in-Advertising.pdf