8th January 2024

Sleep well by keeping on the right side of e-commerce consumer laW

Dark patterns in commercial law

With the January Sales in full swing, e-commerce websites will be seeing the annual highs in traffic as the public indulge in the post-Christmas quest for deals.

But while it might seem tempting for businesses to push consumers to act more impulsively, tactics such as ‘dark patterns’ can cause more problems than they are worth - with some notable businesses currently facing investigations into their practices. Here’s what you need to know.

What are dark patterns?

Dark patterns are a manipulative online selling practice which uses the design and features of a website to coerce or influence consumers into making choices that would not be made under normal circumstances.

Examples include:

  • Subscription traps where users are tempted into a free trial and then switched onto a costly subscription plan if they don’t cancel within a set timeframe (often hidden in the small print);
  • Countdown timers where users only have a few minutes to take advantage of a special offer or discount which can coerce consumers into purchasing items or services quickly for fear of missing out.
  • Hidden charges where eye-catching discount offers that present a price reduction that in reality, may not be so significant.

Other pressurised selling tactics could also include the use of wording such as “50 sold in the last hour” and “100 people have looked at this so far today”.

What can be done when if a website is suspected of using dark patterns?

The Competition and Markets Authority (CMA) can investigate a business and its use of potentially harmful selling practices. The CMA has introduced a specialist enforcement programme focused on Online Choice Architecture (OCA), that is, the way in which the design of websites lead users to certain decisions or actions. "Dark patterns" are a harmful use of OCA.

The main consumer law relevant to dark patterns is the Consumer Protection from Unfair Trading Regulations 2008 which protects consumers from misleading sales and marketing practices. If the CMA finds that the use of dark patterns is in breach of consumer law, then they can demand undertakings from businesses to amend their behaviour in order to address its concerns. The CMA can also apply to the court to enforce this legislation.

In March 2023, the CMA published an open letter to online businesses giving examples of dark patterns that breach consumer protection law. These included countdown timers that give an inaccurate impression of when a promotion will end and discount claims that do not reflect genuine savings.

What is the CMA doing to tackle dark patterns?

On 29 March 2023, the CMA published an open letter to UK businesses providing information on where businesses may be misleading or applying unfair pressure on consumers.

Sarah Cardell, Chief Executive of the CMA stated that “Companies that use fake countdown clocks or misleading ‘discounts’ risk pressuring people into making quick purchases and often spending more money than they otherwise would for fear of missing out. This is especially concerning given the current pressure on people’s pockets”.

Currently, the CMA are only able to enforce breaches of consumer protection law through the courts, although this may change in the future with the introduction of the Digital Markets, Competition and Consumers Bill, which has been put forward to Parliament. If brought into law, it will provide the CMA significant powers to enforce consumer laws directly which includes imposing fines as well as introducing new measures to tackle subscription traps and fake reviews.

What investigations have been initiated by the CMA?

On 15 December 2023, the CMA announced that it has begun an investigation into whether Simba Sleep Ltd uses online sales practices that mislead consumers or apply unfair pressure on them to make rushed purchases of their mattresses. 

This investigation is set to focus on potentially misleading claims about the extent of price reductions and discounts on products as well as the use of urgency claims such as countdown timers that may mislead consumers on the availability of special offers, only for similar offers to appear once the countdown has ended.

If Simba is found to have breached consumer law, the CMA could demand Simba Sleep to amend its practices or could even take court action.

It appears that Simba is not the only who may be losing sleep over dark patterns. In November 2022, the CMA began an investigation following concerns about Emma Sleep’s online selling practices. Following CMA’s investigations, they found evidence that the discount claims made by Emma Sleep did not stack up against the actual savings made by consumers.

Emma Sleep’s use of countdown timers and claims of high demand for certain products were seen as potentially misleading consumers, therefore breaching consumer protection law. Emma Sleep agreed to provide undertakings to change the way it did business to avoid the risk of court action. 

Wowcher have also been subjected to a CMA investigation following concerns over their online selling practices, including whether their urgency claims were misleading shoppers by using countdown clocks and claims that time was “Running out!” or “In high demand!”.

On 16 November 2023, the CMA wrote to Wowcher Ltd, LivingSocial Ltd and other members of the same group concerning potential breaches of consumer protection law following their investigation.

Wowcher must formally address the concerns outlined by the CMA to avoid court action.

Abigail Sinden, Associate in the Thrings Commercial Team said: “To some businesses, turning up the urgency on deals seems like a sure-fire route to success but they will only sleep easy if they ensure their websites and promotional practices don’t breach consumer and advertising law.

“Not only is the use of dark patterns harmful to consumers but the reputational damage a CMA investigation can cause for a business is considerable. Anyone with concerns over their business’ website or advertising practices should seek robust legal advice to ensure they are on the right side of the law.”

Thrings’ Commercial lawyers are experienced in supporting businesses of all sizes through the complicated changing worlds of contracts, intellectual property and technology, helping clients to stay on top of new laws and ensure best practice. Get in contact to find out how they can help your business achieve its goals.

 

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