To Mislead or Deceive by Design: What your FOMO has to do with e-commerce design

THYME BURDON, SENIOR LAWYER, AUSTRALIAN COMPETITION & CONSUMER COMMISSION

As consumers increasingly shop online, online business practices are increasingly falling under the regulatory spotlight. In particular, certain practices employed by e-commerce businesses in the designs of their websites and applications are coming under increased scrutiny due to their potential to mislead or deceive consumers. This article provides an overview of these practices, often referred to as “dark patterns”, with reference to the Australian context.

DARK PATTERNS IN USER INTERFACE DESIGN

The design of a website or app’s user interface (UI) is an important factor in determining the success or failure of an e-commerce business. UI refers to the outward look, feel and interactivity of a website or app and UI design choices include all the visual and interactive elements that a user encounters, including copy, typography, colour schemes, layout, icons, buttons and imagery.

To maximise conversion (the number of visits resulting in sales) an e-commerce UI aims to facilitate seamless browsing, selection and purchasing for the user. Dark patterns are described as manipulative elements of UI design that aim to benefit e-commerce businesses by steering, deceiving or coercing consumers into decisions that they might not make if fully informed and capable of selecting alternatives.

Such practices may result in consumers purchasing unnecessary goods or services or sharing more personal data than they would otherwise choose to.

TAXONOMY

A recent study of “dark patterns” by academics from Princeton University examined the world’s top 11,000 Englishlanguage shopping websites and found that approximately 11% of the sites surveyed contained practices falling within the categories described below.

• Sneaking: Attempts to misrepresent user actions or hide or delay information that consumers would likely object to. Examples include: Sneaking products into shopping carts, often described as “necessary” or “bonus”; Imposing undisclosed and unexpected fees at the final stage of checkout (also known as “drip pricing”); Charging a recurring fee under the guise of a one-off charge or after a consumer provides payment details to secure a free trial (also known as “hidden subscription”).

• Urgency: Imposing prominent deadlines on sales to accelerate purchases, e.g. countdown timers and limited-time messages without a specific deadline. The Study found a high number of fabricated countdown timers upon examination of the website code.

• Misdirection: Use of language, visuals and emotion to steer consumers away from or towards a particular choice without actually restricting the choices available. For example: Wording an option to decline an offer in a way that shames a consumer into opting-in. E.g., an option to decline a discount in exchange for receiving marketing material worded as ‘No thanks, I prefer to pay full price’ (also known as “confirmshaming”); Making the business’ preferred option more prominent and its non-preferred less prominent or greyed-out to give the impression that it is unavailable; Using confusing double negatives in combination with check boxes, e.g. “Uncheck the box if you prefer not to receive email updates”.

• Social proof: Referring generally to what other consumers may have done or be doing. E.g. testimonials of uncertain origin and activity notifications (“57 people are looking at hotels in Glenelg right now”). Again, the Study found a number of examples of fabricated activity notifications upon examination of the website code. • Scarcity: Signalling high demand or limited availability to increase perceived value and desirability. E.g. low stock inventory figures and high-demand messages. • Obstruction: Making certain actions difficult in order to dissuade consumers from taking those actions and not making the process clear up-front. E.g. subscriptions that are easy to sign up to, but hard to cancel.

• Forced action: Requiring consumers to take certain additional and tangential actions to complete tasks. E.g. requiring account creation before consumers can view products, which enables the business to extract personal information from the consumer whether they purchase or not.

HOW DO DARK PATTERNS WORK?

“Dark patterns” work by exploiting common consumer behavioural biases including:

• Anchoring effect: excessively relying on past information in future decisions.

• Bandwagon effect: valuing something more because others seem to value it. • Default effect: sticking with options assigned by default due to inertia.

• Framing effect: reaching different decisions based on the same information depending on how it is presented.

• Scarcity bias: placing higher value on things that are scarce.

• Sunk cost fallacy: continuing an action following investment of resources (e.g. time or money) even if doing so might make you worse off.

Sales techniques targeting consumer behavioural biases are nothing new, e.g. use of the line “while stocks last” to invoke a sense of urgency. However, some studies have shown that individuals pay less attention online than in the offline world, and so consumer behavioural biases may be easier to exploit online. Coupled with this is the complete control an e-commerce business has over the consumer journey through careful UI design. Further, once a website or app goes live the collection of granular data revealing powerful insights about user behaviour and preferences and A/B testing (making different versions of a website or app available to different users) allow for continuous refinement of UI to further improve conversion.

Accordingly, the practices described above may be more effective pursued online than in an offline environment and despite being a headache for regulators, practices that might be considered “dark patterns” may be very attractive to e-commerce businesses where they are proven to result in higher conversion rates. Whilst the focus of this article is e-commerce, the ACCC’s recent Digital Platforms Inquiry, which predominantly examined the practices of Facebook and Google, found that these digital platforms’ UI may also be designed in a way that targets common consumer behavioural biases to makes it less likely for users to opt-out of privacy-intrusive settings.

LOCAL CONTEXT

The core provisions of the Australian Consumer Law (ACL) are technology neutral and consumers have the same legal protections when shopping online as they do in brick-and-mortar stores. The ACL applies where businesses are found to be “carrying on business” in Australia. Courts have interpreted this term broadly and found that it does not require a business to have a physical presence, employees or subsidiaries in Australia.

The ACCC has pursued a number of practices falling within some of the categories identified above that could be described as “dark patterns”. These cases have been taken under the general prohibitions on misleading or deceptive conduct and false or misleading representations about goods or services. Examples include:

• Drip pricing: In 2015, the Federal Court found that both Jetstar and Virgin had misled consumers by drawing them into an online purchase process with a headline price that did not adequately disclose additional fees and charges applied later in the checkout process. The same year, the ACCC also accepted undertakings from accommodation platforms eDreams and AirBnB to improve their up-front disclosures about mandatory service and cleaning fees applying to bookings made via their sites.

• Subscription traps: In 2016, online retailers Fabletics and Scootprice cooperated with the ACCC to change their websites to make ongoing membership fees clearer and more prominent in communications to consumers and throughout the checkout process following concerns that consumers were unaware that they had signed up to recurring monthly subscription payments and had difficulty cancelling memberships.

• Scarcity cues: In April, 2019, the Federal Court found that online ticket reseller Viagogo misled consumers by claiming that tickets to certain events were scarce, with claims such as “less than 1 per cent of tickets remaining”, when the scarcity of the tickets only referred to the tickets sold through its platform and not those available elsewhere, e.g. direct through the event organiser. The Court additionally found that Viagogo failed to adequately disclose significant booking fees applied at the end of the booking process.

• Discount erosion: Whilst not a new phenomenon, the ease at which misleading conduct regarding discounts can occur is arguably intensified online. The ACCC currently has proceedings on foot against Kogan where it alleges that the online retailer increased the price of many products by at least 10% immediately before commencing a limited time 10% discount promotion and then lowered prices to pre-promotion prices shortly after the promotion ended. It is also alleged that the retailer used urgency cues such as “48 hours left” and “ends midnight tonight” to indicate that time to purchase at “discounted” prices was limited, when this was not the case. The examples outlined above involve(d) application of the ACL’s general prohibitions where the impugned conduct was or is (allegedly) misleading or deceptive or created or creates (allegedly) false or misleading representations. Whilst reliance on general prohibitions may require some nuanced argument at times, given the range of dark pattern typologies identified to date and the speed at which e-commerce trends and digital technologies develop, there may be some challenges for specific regulation in this area.

IN SUMMARY

Practitioners should keep in mind the effects of UI design when advising clients on the application of the ACL to their websites or applications. It is possible that a combination of UI design choices may create a false or misleading representation or constitute misleading or deceptive conduct.

And for those of you just consumers not consumer-law practitioners, perhaps the FOMO won’t be quite so strong the next time you see that “Richard from Unley” just purchased that fancy new cordless vacuum you’re considering, there’s only three remaining and the sale ends in 10 minutes.