EU and UK consumer laws use the idea of an “average consumer” when considering if consumer-facing practices and contract terms are fair to consumers. Under the Unfair Commercial Practices Directive (UCPD), which is implemented in the UK by the Consumer Protection From Unfair Trading Regulations 2008 (soon to be repealed and replaced by equivalent provisions in the Digital Markets, Competition and Consumers Act 2024) misleading actions, omissions, aggressive practices or breaches of professional diligence (unless they are banned) are unfair and prohibited if they cause the "average consumer" to take a transactional decision they would not otherwise have taken.  The average consumer is “reasonably well-informed, observant and circumspect”. 

The Court of Justice of the EU recently considered what an “average consumer” is and that an average consumer's ability could be affected by cognitive bias.

In this case, the cognitive bias was that consumers tend to change their preferences based on how contractual offers are presented (or "framed"). In this case, a bank was simultaneously offering consumers both a personal loan and an insurance product. Due to the way the bank presented the two products together, it was likely that consumers would wrongly believe that to receive a personal loan, they also had to take out insurance.

The Court also ruled that the fact that the bank had simultaneously offered a loan and an (unrelated) insurance product was not in itself an aggressive practice under the UCPD. This was because it did not amount to harassment, coercion, or the exercise of undue influence by the bank. However, depending on the circumstances, such framing could be banned as a misleading action under the UCPD. A misleading action is established if the overall presentation of an offer deceives, or is likely to deceive, a consumer about certain key matters so that they take a transactional decision they wouldn't have taken otherwise.

Regulators are increasingly taking action against businesses that exploit cognitive or behavioural biases by using online choice architecture (OCA) or dark patterns.  We recently wrote about the Commission's Digital Fairness Check, in which it said that there were increasing concerns that new technologies and data-driven practices are used to undermine consumer choice and to influence them to take decisions that go against their interests.

The UK's DBT recently published a report on potentially harmful online choice architecture. It did not recommend immediate policy intervention.  However, given the potential for misuse, it recommended a forward-looking approach to policy in order to monitor the impact of OCA, while guiding retailers towards the transparent and consumer-friendly deployment of defaults. However, the DMCC Act will expand the concept of average consumer to include someone who cannot be expected to know information that is concealed by the trader, even if they may have known the information from another source.  This might include the way information is presented (or obfuscated) online.

The DMCC Act also provides that a consumer may be vulnerable (and therefore not acting as an “average consumer" would), because of the circumstances they are in, as well as because of their age, physical or mental health, or credulity.  Examples of relevant circumstances include being in mourning, going through a divorce, and losing a job.

The DMCC Act also removes the requirement for an omission of information to affect a consumer's transactional decision, the omission is enough to breach the Act on its own if it is material to an invitation to purchase.  Businesses should also remember that this is also an area that the ASA regulates and the CAP Code contains extensive provisions on misleading consumers.  It has said that it will consult on amending those provisions to be consistent with the Act.