A recent analysis by the Treasury has highlighted the growing problem of digital giants employing manipulative strategies, including “subscription traps”, which are causing significant harm to consumers. The Australian Competition and Consumer Commission (ACCC) is cracking down on these practices, often referred to as “dark patterns”, designed to ensnare Australians in unwanted recurring subscriptions.
Despite being categorized as “unfair trading practices”, these dark patterns currently fall outside the scope of consumer and competition laws. The Treasury Consultation Regulation Impact Statement (CRIS) warns that evolving market trends continue to pose risks to consumers.
The Treasury is seeking feedback on policy options to address the legal gaps that enable digital giants to continue using such practices. The crackdown is set to gain further momentum when the ACCC releases its seventh Digital Platform Services Inquiry (DPSI) report, which will address competition and consumer concerns related to the expansion of digital platform providers’ ecosystems.
Dark patterns, according to research by the Consumer Policy Research Centre (CPRC), have led a significant number of Australians to share more personal information than intended and have caused younger consumers to overspend by 65 percent. These tactics secure ongoing revenues by trapping consumers in subscriptions that are challenging to cancel, even though a substantial portion of respondents (58 percent) claimed to be aware of organizations using design features to influence their behavior.
The European Data Protection Board (EDPB) identifies six categories of dark patterns, including overloading users with requests, designing interfaces to confuse users, using emotional or visual cues to encourage specific actions, obstructing users from understanding data usage, creating inconsistent and unclear interfaces, and hiding information or privacy controls.
Regulating dark patterns has been a key enforcement priority for EU consumer regulators in 2023, with regulations already implemented to curb manipulative behaviors by a significant number of online operators.
The ACCC is advocating for an Australian prohibition on unfair trade practices, with one potential solution referred to as “don’t be a jerk” laws, as reported in advance of the ACCC report by ABC.
Overseas regulators have also taken action against dark patterns, with the US Federal Trade Commission (FTC) filing a formal complaint against Amazon for allegedly making it difficult for consumers to cancel Prime memberships. Amazon is accused of using dark patterns to deceive consumers into enrolling in automatically renewing Prime subscriptions and complicating the cancellation process to deter subscribers from ending their memberships.
The outcomes of this case are of considerable interest in Australia, where digital giants are opposing regulatory intervention. Companies like Apple, Google, Microsoft, and Amazon argue that they provide clear and transparent practices and pricing, emphasizing that regulations should target conduct with strong evidence of significant competitive harm.
While digital giants continue to defend their practices, the ACCC, Treasury, and overseas regulators are determined to address the growing issue of subscription traps and manipulative tactics employed by these tech giants, emphasizing the need for stronger consumer protections and regulatory action to ensure fair practices in the digital economy.
