We’ve issued previous updates about the Competition and Markets Authority’s (CMA) focus on so called “online choice architecture” which is where the digital design of a consumer’s online purchasing journey is thought to influence the consumer’s behaviour and affect decision making.  In particular, we’ve looked at a paper published by the CMA back in 2022 which discussed the harm caused to competition and consumers by online choice architecture.  We’ve also covered how the CMA’s current consumer enforcement work is looking to tackle aspects of online choice architecture including urgency claims.

Now, the Department for Business and Trade (DBT) has waded into the debate by publishing a study into potential harmful online defaults. Back in 2022, the CMA categorised online defaults as forms of “choice structure” where design architects choose how choices are presented. The CMA went on to say: 

“There is strong evidence that choice structure practices change consumer decisions. There is reliable evidence from the academic literature and competition cases that defaults and ranking exert a strong effect on consumer behaviour, as well as affecting competition.” 

The DBT research in more detail

The DBT research aimed to examine the prevalence of defaults on e-commerce websites and apps used by UK consumers, as well as their impacts on consumer welfare.

The study reviewed 558 of the most popular e-commerce websites and mobile applications in the UK to understand how common the use of defaults is.  The research looked to identify both “hard defaults” (such as pre-ticked boxes) and “soft defaults” or “mimicking defaults” (where there is the visual appearance of a default but a pre-selection has not been made). 

The prevalence study found:

  • 412 instances of defaults being used across 49% of the sampled websites.
  • Defaults were most common in the retail sector where 69% of the sampled websites/apps had at least one default. 
  • 34% of defaults related to some kind of customer service.
  • As well as hard defaults and soft defaults, “enhancers” were also commonplace. The most common of these, found in 31% of defaults, was the addition of a text message around the default to guide the consumer.
  • 64% of default options directed consumers towards cheaper or similarly priced products.

Findings from this prevalence study were then used to carry out an online experiment involving 5,889 participants. The experiment mimicked a real online shopping experience and tested the impact of hard defaults and soft defaults in relation to shipping/delivery options and the purchase of an additional protection plan.  Following the experiment, participants were surveyed to understand their experiences, thoughts, and beliefs about defaults.

Specifically, the online shopping experiment found:

  • In relation to hard defaults:
    • Consumers were 60% more likely to choose the more expensive protection plan and 70% more likely to select the more expensive shipping option.
    • Consumers did not report an impact on their willingness to pay.
    • Overall, 12% less time was spent on the shopping journey.
  • In relation to soft defaults:
    • Consumers did not report an impact on their willingness to pay.
    • There was a minor impact on the time spent on the consumer journey for the protection plan but not for the shipping.
  • The age of the consumer was significant, with older participants being more likely to select the expensive default option.
  • There were differences in how consumers reported their experiences of a default as compared with their behaviours.
  • 16% of participants reported having accidentally purchased at least one item in the past 12 months due to defaults, with 41% of these returning the item.

DBT concludes that, whilst online defaults are commonly used, they are not used generally to mislead or otherwise harm consumers and, given this, there is no immediate need for policy intervention.  However, given the potential for defaults to be misused, it has made key policy recommendations which it says would enhance consumer welfare in the digital marketplace. These include establishing guidelines and best practice for the use of defaults and raising consumer awareness of defaults, particularly amongst the older population who might be more susceptible to their impacts.

What do these findings mean?

Reading between the statistical lines, DBT’s findings are, in places, surprising, even without having regard to the CMA’s previously cited evidence on this topic.  It seems that, in this admittedly prevalent practice, DBT has disregarded that potentially 36% of their sample defaults steered consumers to more expensive items and, if exposed to a pre-selected default, 70% of consumers were more likely to select the more expensive shipping option.  Further, whilst 16% of consumers accidentally purchasing at least one item due to a default doesn’t seem at first sight to be very high, when this figure is translated more broadly to UK online shoppers, it means that up to 9.6 million UK consumers are at risk of making incorrect purchasing decisions because of defaults. 

As a result, I expect this is not the last we’ve heard about online defaults. While DBT is not prepared to legislate to regulate them, the CMA could approach them using the current law or by putting their weight behind DBT’s non-legislative recommendations.  Either way, complacency in their use online is not the default option.