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FTC Staff Report Details Rise In Dark Patterns – Dodd-Frank, Consumer Protection Act



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A September 2022 FTC Staff Report has revealed that manipulative
marketing practices by businesses, termed “dark
patterns,” is on the rise. The Federal Trade Commission
(“FTC”) is a United States government agency whose
primary mission is to protect consumers and enforce civil antitrust
laws. Since the advent of direct mail and brick and mortar retail,
some unscrupulous businesses have utilized tactics, such as hidden disclosures and confusing cancellation
policies
to create unwilling repeat customers. However, the
shift to online retail has created an alarming amount of growth in
the sophistication and utilization of dark patterns. Coined in 2010
by a user experience specialist named Harry Brignull, the term
“dark patterns”
describes subtle design tricks that
influence consumers into making unintended decisions, or to the
same end, discourage behavior that hurts a business’s bottom
line. On April 29, 2021, the FTC hosted a public
workshop on dark patterns and their effect on consumer behavior.
The Staff Report summarized the panelists’ concern – that the
continued use and development of dark patterns in the digital space
can pose a heightened risk to consumers. Issuing the Staff Report
may serve as the FTC’s final warning. Even though dark patterns
manipulate user behavior in a subversive manner, these practices
are now firmly on the FTC’s radar.

What Are Common Examples of Dark Patterns?

Numerous types of dark patterns exist, but the FTC has
classified them into one of four general categories: 1) Design
elements that induce false beliefs; 2) Design elements that hide or
delay disclosure of material information; 3) Design elements that
lead to unauthorized charges; and 4) Design elements that obscure
or subvert privacy choices. Some websites disguise advertisements
by misleadingly designing them to appear as unbiased product
reviews or independent news articles. Some companies induce false
beliefs by including “from” lines in emails that mislead
consumers into thinking that they are being contacted by a news
organization, such as CNN, for example. Baseless countdown timers
create a false sense of temporal urgency by displaying an arbitrary
countdown clock to pressure consumers to complete their purchases
right away. Some businesses hide material information in fine
print, behind nondescript hyperlinks, or in pop-up boxes that only
appear if a consumer mouses over the correct area of their
websites. According to the FTC, preselected defaults, such as
pre-checked “accept tracking” cookies boxes, can subvert
privacy choices. Some companies offer free trials, but
automatically subscribe consumers if they do not affirmatively
cancel, leading to unauthorized charges, in violation of state and
federal law. Making matters worse, the channels by which consumers
must cancel their subscriptions are often extremely convoluted and
lengthy. New York and California have already enacted
laws
to prevent companies from forcing subscription continuity
with hard to navigate cancellation procedures. Many online shoppers
have complained that they not only have encountered multiple dark
patterns in a single session, but also felt the resulting
frustration of dealing with them.

The FTC Will Revise the Rules and Regulations it Has in Place
to Address Dark Patterns

In pursuit of its mission to protect consumers from their own
actions, or inactions, the FTC administers a wide variety of laws
and regulations, including the Federal Trade Commission Act (the
“Act”). Section 5(a) of the Act prohibits “unfair
or deceptive acts or practices in or affecting commerce.” An
act or practice is deceptive where a representation, omission, or
practice misleads or is likely to mislead the consumer; a
consumer’s interpretation of the representation, omission, or
practice is considered reasonable under the circumstances; and the
misleading representation, omission, or practice is material.”
An act or practice is “unfair” if it “causes or is
likely to cause substantial injury to consumers which is not
reasonably avoidable by consumers themselves and not outweighed by
countervailing benefits to consumers or to competition.”

In light of the findings contained in its September Staff
Report, the FTC will most likely make sweeping changes to counter
the sophistication and proliferation of dark patterns. As noted
above, states have passed laws to tighten regulations applicable to
subscription enrollment and cancellation requirements. This is not
necessarily bad news for those that engage consumers online.
Businesses simply have to be willing to adapt and adopt a position
whereby consumers are retained through loyalty, and not through
user interface design. To do so properly, companies should retain
counsel that is experienced in the online marketing space.

If you require assistance in complying with the FTC’s rules
and regulations as they ramp up enforcement against dark patterns,
please email us at [email protected] or call us at (212)
246-0900.

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FTC Guidelines on Negative Option Marketing
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Social Media Influencers and FTC Lawsuits

LendEDU to Settle Alleged FTC Marketing Law
Violations

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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