3 mins read

Only holistic regulations for retail can protect consumer rights: Experts

Thoughtful implementation of Dark Pattern guidelines can overcome ad-hoc regulation

The recent issuance of guidelines by the Central Consumer Protection Authority (CCPA) for the prevention and regulation of dark patterns in India has sparked a debate among industry experts. The well-intentioned guidelines are ambiguous in interpretation, applicable only for ~4% of the Indian retail sector, and most importantly does not provide time to the players to make necessary changes to comply with the law.

In a virtual session hosted by Empower India, industry thought leaders engaged in a discussion on the challenges posed by the guidelines, particularly in the realm of e-commerce and online booking services. The intent of provisions appears to tackle practices that materially mislead the public in diverse industries including online travel and stay booking, online insurance, food aggregators, e-commerce, advertisers. However all these industries have different models and to regulate them through a single guideline places a burden on the regulators.

Mr. K.Giri, Secretary General, Empower India, said, “India’s digital movement is noteworthy. Thanks to the efforts of the current government, people are embracing digital ways of doing business. The dark patterns guidelines seem to address concerns in advanced geographies which may create hurdles to Indian entrepreneurs. As the guidelines are valid only for online players, I fear entrepreneurs will stop adopting digital and look to traditional offline way to conduct business.“

Mr. Avimukt Dar, Founding Partner at IndusLaw, emphasized the need for a balance between consumer protection and innovation, stating, “The current measures need closer scrutiny and must encourage a vibrant digital ecosystem. There is a concern that while the consumer awareness objective is laudable, an aggressive regulatory approach might lead to unintended consequences, as it could inadvertently open avenues for competitors to exploit the regulations by launching frivolous complaints against each other to the detriment of smaller companies and startups.” Emphasizing the crucial role of product designers, he added, “Product designers play a crucial role in enhancing the relationship between sellers and shoppers, providing a human touch to the online shopping experience. A balance is needed to ensure these guidelines don’t risk stripping away the increasingly holistic experience of online commerce.” Dar felt that core consumer issues such as defective products, deficient services, defamation and fraud, should continue to command appropriate focus.

Meghna Bal, Head of Research at the Esya Centre, highlighted some of the challenges presented by the guidelines, saying “The new guidelines have introduced uncertainty regarding consequences for non-compliance. Unlike the earlier draft, the final version eliminates clarity on the application of the Consumer Protection Act, 2019, leaving ambiguity in how penalties will be enforced. Concerns also arise about potential misuse by motivated parties against competitors. Before such guidelines are implemented, a thorough study of the market fallout is essential to understand the real impact on businesses and innovation.” She also drew inspiration from the US FTC’s approach on how a clearer framework could assess unfair or deceptive practices with remedies for significant injuries, minimizing misuse potential. Advocating for a level playing field, she added, “Overlooking offline dark patterns, the guidelines lack focus on conduct genuinely harmful to consumers.” She concluded by saying “If we consider the guidelines normatively, they emphasize user autonomy. The problem with the user autonomy standard is that it is hard to measure – how do you know when an interface violates such autonomy. This, once again, creates scope for arbitrariness in enforcement.”

Mr. Saptarshi Prakash, Director of Design at Swiggy, weighed in on the need for consumer choice, stating, “If we are a free market economy, we need to give some choice to consumers. While this guideline is a crucial step in helping the common person understand the nuances of dark patterns, regulations must aim to enhance transparency and protect consumers without stifling the ability of businesses to compete and innovate.” The experts also noted that certain legitimate long-term business practices such as limited-time offers or sales, which helps drive customer purchases and sales for businesses, may be classified as dark patterns, potentially limiting businesses’ ability to leverage common marketing tactics and access valuable consumer data.

While regulations aimed at curbing dark patterns are well-intentioned, it’s crucial to ensure they are carefully crafted to avoid unforeseen repercussions and help foster a healthy and innovative business ecosystem. The ultimate goal for any regulation is to strike a balance between protecting consumers and allowing businesses to operate efficiently. Open dialogue and collaboration between policymakers, businesses, consumer advocates, and stakeholders are essential to achieve this delicate balance.

Leave a Reply