The Need for The Triangular Approach - Dark Patterns
23-12-2024
India's Ministry of Consumer Affairs, Food, and Public Distribution guidelines regarding preventing and regulating dark patterns in 2023 have sparked vital discussions on deceptive market practices (Government of India Department of Consumer Affairs, 2023). Guidelines for Prevention and Regulation of Dark Patterns, 2023, defines dark patterns as deceptive design practices that mislead users into actions they did not intend, undermining their autonomy and constituting unfair trade practices. Dark patterns (or) deceptive patterns in simple terms can be defined as the software design techniques used in platforms to influence the digital choice-making and decision-making process of consumers. For centuries, deceptive market practices have existed. Historically, such practices have existed in various forms, but the internet's evolution has magnified manipulation in digital spaces. Misleading advertisements and hidden fees are now commonplace, with some designers exploiting psychological vulnerabilities through user interface (UI) and user experience (UX) design techniques. The dark patterns have dire consequences such as erosion of trust, user frustration, legal and regulatory risks, harm to vulnerable users, reduced customer satisfaction and retention, undermines ethical business practices, lack of user autonomy, can encourage unethical competitor practices, damage to brand reputation etc.
Globally, the regulation of dark patterns has gained momentum, with the European Union and the United States leading the charge. The General Data Protection Regulation (GDPR) implemented in the EU in 2018 and subsequent U.S. regulations, such as the California Consumer Privacy Act amendments, have taken steps to ban or regulate such practices. In June 2023, the Federal Trade Commission (FTC) filed a complaint against Amazon for using dark patterns to coerce users into subscribing to services without explicit consent (Federal Trade Commission, 2023). This prompted criticism that many e-commerce platforms employ even more deceptive tactics. In addition to this, the Colorado Privacy Act and Connecticut Data Privacy Act restrict the use of "dark patterns." Further, the Restore Online Shoppers Confidence Act prohibits the usage of the "negative option feature" until certain conditions are met (The Federal Register, 2024).
India's e-commerce industry is rapidly growing, with a projected CAGR (compound annual growth rate) of 21%, yet it faces rising instances of online consumer fraud (Nandan N, 2024). To address the challenges, the Consumer Protection Act and E-commerce rules (2020) sought to regulate emerging technologies by bringing e-commerce entities within their ambit. Further, the scope of the definition of a 'consumer' has been widened to include those who buy any goods and hire or avail of any service online through electronic means; this makes the online platforms accountable for misleading advertisements and unfair trade practices. The recent guidelines focus on dark patterns, reflecting India's commitment to protecting consumers in an increasingly digital marketplace.
Triangular Problem
The regulation of dark patterns involves three major stakeholders: the government, e-commerce platform operators, and consumers. For the effective implementation of the regulation and to prohibit dark patterns, the government must balance consumer protection with the compliance burden on businesses. While regulations are essential for safeguarding consumer rights, excessive compliance costs can hinder small businesses and limit consumer competitive pricing.
Government
Although other relevant Indian legislation indirectly addresses dark patterns, introducing these guidelines marks a significant step forward. The government's role is crucial in creating an environment where consumers are protected from deceptive practices, which can boost trust and enhance the digital economy. However, regulations must remain dynamic to keep pace with evolving technologies and new deceptive practices. As a member state of the United Nations Conference on Trade and Development (UNCTAD), India has adopted various laws concerning e-governance, e-business, and e-society, such as e-transaction, consumer protection, cyber-crime, and data protection laws (Chawla N and Kumar B, 2021).In continuation of this, India has an obligation to regulate dark patterns to uplift its place in the global market.
E-Commerce Platforms
E-commerce platforms, meanwhile, express concerns that the compliance burden resulting from these guidelines could stifle innovation and increase operational costs. The Asia Internet Coalition (AIC) has advocated for self-regulation as a more flexible approach that allows companies to adapt to changing technologies while ensuring accountability. Striking a balance is essential to avoid over-regulation, which can lead to more creative evasion tactics and discourage beneficial user engagement strategies. Asia Internet Coalition (AIC), in their letter to the Department of Consumer Affairs on draft guidelines, emphasized the need for Self-regulation (Asia Internet Coalition, 2023). Self-regulation allows companies to continuously change and adapt their internal policies in response to evolving technologies while ensuring accountability by the relevant market players. A self-regulatory framework can achieve this without increasing the compliance burden on platforms and online services/products.
Consumers
Consumers, particularly vulnerable groups like the elderly or illiterate, need robust protection against dark patterns. Deceptive practices can lead to significant financial loss, privacy infringements, and psychological harm. Effective regulation can help mitigate these risks, ensuring consumers are not coerced into agreements they do not understand. By fostering transparency and respect for consumer choices, trust in e-commerce platforms can be enhanced, promoting conscious spending and reducing monetary loss.
In conclusion, preventing and regulating dark patterns is essential for fostering a fair and trustworthy digital marketplace. A balanced approach that considers the rights and responsibilities of all stakeholders, including government, e-commerce platforms, and consumers, is vital for effective regulation. India should emphasize principle and rule-based regulation rather than creating separate guidelines. As the government focuses on initiatives like Make in India and Startup India, it is crucial to avoid overlapping regulations that could hinder the growth of smaller e-commerce players and lead to monopolistic practices. The OECD's study on dark patterns will provide further insights into consumer vulnerabilities and reactions (OECD, 2021).
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