FTC Report Details ‘Dark Practices’ Companies Should Avoid
WASHINGTON — As the Federal Trade Commission continues to crack down on “dark practices” that are intended to trick customers, it came out with a report detailing the tactics of misleading advertisements, hard-to-cancel subscriptions, hidden terms of service and other tricks to gather data.
“Our report shows how more and more companies are using digital dark patterns to trick people into buying products and giving away their personal information,” said Samuel Levine, director of the Bureau of Consumer Protection, in a statement. “This report — and our cases — send a clear message that these traps will not be tolerated.”
The 48-page report details how the once paper-based tactics of pre-checked boxes, hard-to-read disclosures and other marketing ploys have “grown in scale and sophistication, creating ever greater challenges for consumers” as retail goes online, according to the report created by information from public comment and through a variety of enforcement actions taken by the regulatory agency.
The report breaks the “dark patterns” into four different types — misleading consumers and disguising ads, making it difficult to cancel subscriptions or charges, burying key terms and junk fees and tricking consumers into sharing data.
The internet also makes combining these practices even easier, the report states.
“The pervasive nature of data collection techniques, which allow companies to gather massive amounts of information about consumers’ identities and online behavior, enables businesses to adapt and leverage advertisements to target a particular demographic or even a particular consumer’s interests,” according to the report. “Moreover, companies that market online can experiment with digital dark patterns more easily, frequently, and at a much larger scale than traditional brick-and-mortar retailers, to determine which design features most effectively influence consumer behavior.”
The report references the recent action taken against Credit Karma as an example of false advertising. The commission alleges the company used advertisements promising people they were pre-qualified for credit to drive them to apply for a credit card when they were not actually pre-qualified. When they were not granted credit, there were negative impacts to their credit scores. The company denies those allegations and the case is ongoing.
Deceptive practices are also more common in smartphone applications versus traditional websites, the report states.
Throughout the report, alongside the examples of cases the commission has brought because of these deceptive practices, there are recommendations about how to comply with regulatory guidelines.
“To comply with the FTC Act, companies should make certain that their online interfaces do not create false beliefs or otherwise deceive consumers. Companies are on the hook for the net impression conveyed by the various design elements of their websites, not just the veracity of certain words in isolation,” the report states.
The commission hopes the report on “dark practices” outlined in the report helps companies refrain from those practices and avoid potential penalties, it states.
“While dark patterns may manipulate consumers in stealth, these practices are squarely on the FTC’s radar,” according to the report.