Dark patterns remain firmly under the regulator’s spotlight

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This week the Competition and Markets Authority (the “CMA”) has continued to shine a light on dark patterns, publishing an open letter for online businesses regarding urgency and price reduction claims and an update to its ‘Online Rip-Off Tip-Off’ campaign addressing misleading online practices.  This article explores each of these as well as future potential enforcement and areas of focus against the backdrop of the anticipated Digital Markets, Competition and Consumer Bill (which has yet to be published at the time of writing this article).

Open letter for online businesses regarding urgency and price reduction claims:

The CMA has published an open letter for online businesses in relation to misleading price reduction and urgency claims – describing these practices as its ‘online red lines’.  Urgency claims can be made in various ways, for example by using countdown timers to indicate how much time a consumer has to take advantage of a special offer before it expires, or by indicating that stock levels are low. Whilst the CMA acknowledges in the letter that these kinds of claims can be legitimate, such claims can be made in a misleading or unfair way, in breach of consumer law.

The letter is largely a reminder of existing laws and the recommended compliance approach when making urgency and price reduction claims. It does not set out anything radically new. However, what is interesting is that it reveals the CMA’s enforcement priorities, with the CMA stating in the letter that it is focussing on these kinds of claims as part of its work on online choice architecture (“OCA”).

OCA refers to how the design of the online environment (such as websites and apps) can affect a consumer’s decision-making and actions. OCA can be harmful where the online environment deceives or misleads consumers in some way. Such harmful OCA is often referred to as “dark patterns”.

There is also an ongoing CMA investigation into the Emma Group’s use of online urgency claims, such as countdown clocks, as part of its OCA work, and the letter is clearly linked. Given the CMA’s focus on this particular type of dark pattern (which is arguably one of the clearer and more prevalent types of dark pattern), the enforcement risk in this area is high and we recommend that affected businesses review the letter and prioritise compliance.

New online reporting form and videos for the CMA’s ‘Online Rip-Off Tip-Off’ campaign:

The CMA has also published an update in relation to its ‘Online Rip-Off Tip-Off’ campaign, fronted by Angellica Bell, which seeks to raise consumer awareness about misleading online practices and invites consumers to easily report “sneaky online sales tactics” to the CMA via a new online form.

The ‘Online Rip-Off Tip-Off’ campaign now includes a series of videos covering the following examples of misleading online practices:

  • Hidden charges: This relates to where there are unexpected compulsory charges, taxes or fees added when a consumer tries to make a purchase online. For example, this could arise if extra costs are added to the original price when a consumer reaches an online checkout.
  • Pressure selling: This relates to where a misleading impression is given to consumers about the availability, popularity or usual selling price a product or service. Sales tactics regarding misleading price reduction and urgency claims are explored in the CMA’s open letter for online businesses with it describing them as its ‘online red lines’.
  • Subscription traps: This relates to where consumers are misled into signing up to, and paying for, an unwanted subscription (such as through an attractive introductory offer) that is difficult to cancel.
  • Fake reviews: This relates to where reviews are published online that do not actually reflect the genuine opinion or experience of a customer in relation to a product or service.

The combination offered by the campaign of raising awareness and facilitating easy reporting could lead to consumers becoming savvier at identifying, avoiding, and reporting to the CMA misleading online practices.

Future potential enforcement and areas of focus:

Future enforcement in relation to other types of dark patterns cannot be ruled out: last year, Sarah Cardell, then interim Chief Executive of the CMA, commented that the CMA’s investigation into the Emma Group is “just the start” of the CMA’s work into potentially misleading online claims, with all sectors under scrutiny.

The Government set out its anticipated consumer law proposals in April 2022 for its highly-anticipated Digital Markets, Competition and Consumer Bill (which is not yet published at the time of writing this article). This Bill is expected to introduce new compliance obligations and strengthen the enforcement regime, including by giving the CMA the power to enforce consumer law directly, and by enabling fines of up to 10% of a business’ global annual turnover to be imposed for consumer law breaches. If passed, this Bill may therefore significantly increase the enforcement risk posed by engaging in non-compliant online practices.

Whilst today the CMA’s open letter for businesses focusses on urgency and price reduction claims, other types of dark patterns may also be subject to CMA scrutiny in the future.  In particular, there is ongoing concern about “subscription traps” at a legislative and regulatory level, where many of the compliance concerns could be rebranded as potential dark patterns.  It is expected that the Digital Markets, Competition and Consumer Bill will include the following requirements in order to help tackle subscription traps:

  • giving clearer information upfront;
  • sending reminders before an auto-renewal and before a free or discounted promotional offer is expiring; and
  • requiring a straightforward, cost-effective, and timely mechanism to end the contract.

With a new consumer Bill on the horizon and with the CMA addressing subscription traps as part of its ‘Online Rip-Off Tip-Off’ campaign and having investigated subscription contracts in several sectors already (including the anti-virus software and online console video gaming sectors), it is clear that the CMA remains interested in subscription businesses. It could launch another investigation targeting subscription businesses in other sectors, perhaps with a specific focus on dark patterns.

If you would like to discuss urgency and price reduction claims, online choice architecture, dark patterns, your subscription offering or another consumer law issue, please do not hesitate to contact one of our specialists.