Recent concerns with mis-advertising have led to various pro-consumer measures in India. This includes overhauling the consumer laws and attaching liability to platforms, sellers and advertisers (including influencers and celebrities) for misleading ads and malpractices.
The latest pro-consumer measure is the regulation of dark pattern practices, by way of notification of ‘Guidelines for Prevention and Regulation of Dark Patterns, 2023’ (“Guidelines”).
Platforms, sellers and endorsers have a duty of care and accountability with respect to products and services they provide, sell or call upon consumers to buy. It is, therefore, important for them to know about ‘dark patterns’ and from a compliance perspective, avoid them.
What is a dark pattern?
The Guidelines define a dark pattern to mean any practice or deceptive design pattern that:[1]
- uses a platform or a user interface;
- to mislead or trick users to do something that they did not intend to or want to do;
- by subverting or impairing consumer decision or choice;
- that would amount to (i) misadvertising or (ii) unfair trade practice or (iii) violation of consumer rights.
Specified Dark Patterns under the Guidelines
An illustrative list of dark patterns has been provided in the Annexure to the Guidelines.[2] The patterns are self-explanatory and are accompanied with examples which make the dos and don’ts easy to understand.
Below is a summary of the illustrations from the Guidelines:
- False urgency: Pressure tactic to take a decision quickly. Example: Only 2 rooms left! 30 others are looking at this right now.
- Basket sneaking: Adding additional products or services to cart at check-out, except for necessary fees[3]. Example: Automatic addition of travel insurance; pre-checked boxes for purchasing items.
- Confirm shaming: Using a phrase, video, etc., to create a sense of fear, guilt, shame. Example: “Charity is for the rich, I don’t care” when a user opts out from contributing towards charity.
- Forced action: Pushing a user to take an action which he/she may not want to. Example: Mandatory subscription to an unrelated newsletter or sharing of personal details while purchasing products or services.
- Subscription Trap: Making cancellation of a paid subscription complex or a lengthy process. Example: Hiding cancellation option or provide confusing instructions for cancelling subscription.
- Interface interference: A design element which manipulates the user interface by deliberately highlighting certain specific information and negating related information to manipulate the user’s actions or misdirecting them while taking an action. Example: Using a virtually less prominent ‘X’ or ‘No’ in a pop-up that asks users if they wish to make a purchase.
- Bait and switch: Showing something, providing something else![4] Example: Advertising a product at a cheap price but showing the product as unavailable in the shopping cart and instead offering similar products at an expensive price.
- Drip pricing: Total price not shown upfront; charging higher at checkout; product or service advertised as free without the disclosure that an in-app purchase is necessary to use the free product or service; not offering already paid services until additional paid service is availed. Example: Platform changes flight price to a higher price while paying.
- Disguised advertisement: Mis-advertisements, masked, or false advertisements. Example: When an influencer or celebrity endorses or promotes a product or an experience as their own, without mentioning that it is a paid advertisement.
- Nagging: Disrupting or annoying user through requests, options, or interruptions to force them into making transactions resulting in commercial gain. Example: A website persistently asking a user to download its app.
- Trick Question: Deliberate use of confusing or vague language (confusing wording, double negative, or other similar tricks) to misguide or misdirect a user from taking a desired action. Example: Do you wish to opt out of receiving updates on our collection and discounts forever?” using phrases like, “Yes. I would like to receive updates” and “Not Now,” instead of the option, “Yes”.
- SaaS Billing: Collecting payments from consumers on a recurring basis in a software as a service (SaaS) business model. Example: Auto-debit on conversion of free trial to a paid service, or silent recurring transactions, or charging for services a customer does not use.
- Rogue Malwares: Using ransomware or scareware to mislead or trick a user into believing that there is a virus on their system and making them pay for a fake malware removal tool. Example: App promising to provide free content but embedding malware when the link is accessed.
Applicability of Guidelines
The Guidelines are applicable to:[5]
- Advertiser being a person who designs, produces, or publishes advertisement either himself or through any other party to promote his own products.[6]
- Seller who in the course of business, inter alia, imports, sells, distributes or is involved in placing of a product for commercial purpose and includes a manufacturer or a service provider.[7]
- Platform which is any website or application used to systematically offer goods or services in India[8].
The applicability of the Guidelines to the platforms in India is direct.
The term “systematically offers goods or services in India” has not been defined in the Guidelines. However, a reference can be made to The Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 where “systematic activity” is defined to mean any structured or organised activity that includes an element of planning, method, continuity, or persistence.[9]
Applying the above definition, it can be interpreted that, an e-commerce platform, though not based in India, but which on a regular basis provides goods/services to customers/users in India, could also fall under the ambit of the Guidelines.
Further, the Consumer Protection Act, 2019 (“CPA”) and the Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022, require endorsers to perform their own due diligence inter alia by verifying the information or experiencing the product or service so that they can confirm the claims regarding the product or service before endorsing them.
There have been instances in the past where endorsers have been served notices with respect to the brands they endorse. In fact, under the CPA, the endorser may be required to pull down misleading content and may also be subject to penal consequences (i.e. penalties and/or imprisonment) for false/misleading advertisements. In certain instances, endorsers may also lose the right to advertise any goods or services for a specific period of time.[10] Endorsers should, therefore, revisit their agreements with brands they endorse and undertake necessary diligence, including on dark patterns, to protect their interest.
Consequences of violation of the Guidelines
While the draft guidelines issued in September 2023 stated that contravention of the guidelines would invoke the CPA, the Guidelines are silent on implications for non-compliance. However, since a dark pattern, by definition, needs to either be (a) an unfair trade practice or (b) a misleading advertisement or (c) in violation of consumer rights, consequences under CPA for such violations will apply.
The consequences for unfair trade practice or a violation of consumer rights (for false or misleading advertisement under CPA) can be varied. It can range from a direction to withdraw the product or service from the market and discontinuation of the unfair trade practice to reimbursement of the price paid by the customer for the goods or service[11], and/or hefty penalties or imprisonment in some cases.
International precedence
United States
In the United States, the Federal Trade Commission (“FTC”) has taken a proactive stance against businesses engaged in the practice of dark patterns. In September 2022, FTC published a report titled Bringing Dark Patterns to Light (“FTC Dark Patterns Report”). The Report defines dark patterns as “design practices that trick or manipulate users into making decisions they would not otherwise have made and that may cause harm”. It also suggested that the FTC would stop deceptive or unfair business practices in the marketplace including those that take the form of dark patterns, under its legislative mandate derived from the FTC Act.[12] A compiled list of dark patterns in the FTC Dark Patterns Report resembles the specified dark patterns under India’s Guidelines.
Further, FTC has also taken action against several businesses including technology and e-commerce behemoth Amazon as well as US-based internet phone service provider Vonage. While FTC alleged that Amazon was using manipulative and deceptive user interface designs (interface interference) to trick consumers into enrolling for the Amazon Prime Subscription but making cancellation of the subscription difficult, it asked Vonage to refund $100 million to the customers for maintaining a lengthy subscription cancellation process.
European Union (“EU”)
The EU has outlawed dark patterns under the Digital Services Act (“DSA”), which will be effective from February 2024. The DSA defines dark patterns as practices that aim to prevent users from making autonomous and informed choices or decisions which tend to distort or impair the user’s freedom of choice.
Further, the EU Guidelines for Dark Patterns in Social Media platforms published by the European Data Protection Board highlight specific dark patterns that are unique to social media platform. These patterns aim to influence user behaviour such that users are unable to protect their personal data and make conscious choices.
Takeaways
In India, Dark Patterns discussed in the Guidelines are not uncommon and therefore, the Guidelines don’t come as a surprise. The regulatory framework for dark patterns has been evolving in India for a while now.[13] The Guidelines are an additional step towards the consistent efforts taken by the Department of Consumer Affairs towards consumer protection.
Given that Guidelines are in force, and dark patterns are a cause of concern internationally as well, it will be good for platforms, advertisers, advertising agencies, and even celebrities and influencers to know about them and take course correction actions as needed.
* The Authors were assisted by Muazzam Nassir
For further information, please contact:
Aarushi Jain, Partner, Cyril Amarchand Mangaldas
aarushi.j@cyrilshroff.com
[1] Clause 2(e) of the Guidelines
[2] Annexure 1 to the Guidelines.
[3] Annexure 1 of the Guidelines defines “necessary fees” to mean the fees which is necessary to fulfil the completion of the order such as delivery charges, gift wrapping, additional taxes on the product charged by the government or any other charges which are explicitly disclosed to the consumer at the time of purchase.
[4] Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022 define a bait advertisement as an advertisement in which goods, product or service is offered for sale at a low price to attract consumers.
[5] Clause 3 of the Guidelines.
[6] Clause 2(b) of the Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022.
[7] Rule 2(j) of the Consumer Protection (E-Commerce) Rules, 2020.
[8] Rule 2(i) of the Consumer Protection (E-Commerce) Rules, 2020.
[9] Explanation (b) to Section 8(2)(b) of the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021.
[10] Section 21 (3) of the CPA.
[11] Section 20 of CPA.
[12] Section 5(a) of the FTC Act, in Bringing Dark Patterns to Light (ftc.gov)
[13] In June 2023, Advertising Standards Council of India[13], issued the Guidelines for Online Deceptive Design Patterns in Advertising which described dark patterns as a practice commonly found in online user interfaces that lead consumers to make choices against their best interest.
