As described in our update back in May, Online Choice Architecture looks set to be the next consumer law hot topic. We are now starting to see some regulatory action in this space with the Competition and Markets Authority’s announcement that it will be launching a new programme of consumer enforcement work focused on Online Choice Architecture. This is aimed at tackling potentially harmful online selling practices, including pressure selling tactics such as urgent time limited claims.
What is OCA?
Online Choice Architecture is the design of the online environment in which consumers interact with businesses. The CMA has been busy unpicking the issues associated with OCA and earlier this year issued an evidence review of OCA and an associated discussion paper setting out 21 regularly used, and potentially harmful, practices which can affect consumer decision-making. The CMA breaks OCA practices down into the following categories – (1) choice structure (the design and presentation of options); (2) choice information (the content and framing of information provided); and (3) choice pressure (through indirect influence of choices). The CMA has concluded these practices can distort consumer behaviour, weaken competition, and ultimately harm consumers - see our update here for further detail.
Investigation into Emma Sleep
The CMA’s consumer enforcement programme focusing on OCA will kick off with an investigation into Emma Sleep and, whether it has misled consumers by using countdown timers and claims about time limits to imply that a discounted price will end soon, when this may not in fact be the case.
The CMA will now engage with the Emma Group and gather further evidence to determine whether the CMA considers any of the companies in the group may have broken consumer protection laws (the main consumer protection legislation relevant to the CMA’s concerns about misleading time limited online discounts is the Consumer Protection from Unfair Trading Regulations 2008).
Our readers may also remember that interestingly the ASA issued a ruling dated 16 March 2022 in which it upheld complaints against Emma relating to the use of misleading reference pricing and a misleading flash sale countdown clock. The ASA found there had been a breach of the UK Code of Non-broadcast Advertising and Direct & Promotional Marketing.
What’s next for the CMA’s new programme of consumer enforcement work focused on OCA?
According to the CMA, the investigation into Emma Sleep is just the start of the new programme of consumer enforcement work around OCA. The CMA has noted that all sectors are under scrutiny and it intends to look more broadly at online sales practices including:
- urgency tactics such as countdown clocks, where sellers put pressure on shoppers to buy quickly; and
- eye-catching discount offers, such as ‘50% off’ claims, when the real price reduction may not be as great as claimed.
How are other regulators approaching OCA?
Online Choice Architecture is not just a hot topic in the UK. OCA and so-called dark patterns are on the radar of most regulators including the European Commission and the FTC in the US.
The EU’s Digital Services Act already introduces restrictions on dark patterns used on online platforms’ interfaces but it looks like new laws could be introduced to extend restrictions into the consumer law space. The European Commission is currently consulting on the Fitness Check of EU consumer law on digital fairness and is examining the adequacy of the existing main EU rules in dealing with consumer protection issues (such as dark patterns, influencer marketing, subscription contract cancellations, unfair contract terms, the marketing of virtual items and in-app currencies, amongst others). It aims to establish whether additional legislation or other action is needed in the medium-term to ensure equal fairness online and offline. The consultation ends on 20 February 2023.
As regulatory action looks set to ramp up in relation to Online Choice Architecture and dark patterns, companies need to be careful that their practices comply with the law.
"This investigation into Emma Sleep is just the start of our work into potentially misleading online claims and all sectors are under scrutiny" Sarah Cardell, interim Chief Executive of the CMA