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ACM marks the boundaries of misleading practices online

03-12-2019

At what point does persuasion turn into deception? That question is at the heart of the guidelines called “Protection of online consumers,” which the Netherlands Authority for Consumers and Markets (ACM) published today for public consultation. On the Internet, businesses have become better and better at nudging consumers in their decision-making and purchasing processes. They invest heavily in the collection of data and behavioral insights in order to be able to influence consumers effectively. Offers that are tailored to your personal profile may seem useful, but you do not know the options that were not presented to you. Personalized offers could thus act against your interests. In its guidelines, ACM gives its interpretation of the statutory standards regarding online deception. The objective of the guidelines is the protection of online consumers, and the creation of a level playing field as businesses play by the rules.

Cateautje Hijmans van den Bergh, Member of the Board of ACM, explains: “We should make sure that businesses are not the ones that decide what the right choices are for consumers. This will happen if businesses present consumers with specific information in a targeted manner, while withholding other information. In that way, businesses are able to exploit typical behavioral responses among consumers, and use these to their own advantage. We see that huge commercial interests play a big role in these processes. Our aim is to prevent online consumers from getting the short end of the stick.”

What seems to be the problem?

On the Internet, businesses have become better and better at using in a targeted manner the data that they have collected in order to entice consumers into making certain choices or purchases. Tools such as algorithms and artificial intelligence can be used for the benefit of consumers, but also for consumer manipulation. After all, the information that consumers get to see may have been picked for them in advance or may be presented to them in a certain order or context. As a result, consumers are presented ‘preselected’ choices. Consumers tend to go (unconsciously) for these preselected choices. Yet, these choices are not always in their interests, or may even be harmful. Furthermore, the playing field becomes uneven if the other businesses do put consumer interests first.

How does this process work? Imagine you are looking online for a hotel room. The platform that you are using decides what search results you get to see. Are these the rooms that meet your search criteria best? Or are these the rooms of providers that paid the platform the most? And what about the order in which they are presented to you? Who gets to decide that order? Is it based on relevance to you as consumer, or on something else? Individual consumers are unable to verify this. Yet the information as it is presented does make each consumer make certain choices.

In what situations does it go wrong, and does persuasion turn into deception?

Consumer protection rules stipulate that consumers must be given the opportunity to make well-informed choices based on correct and complete information. That is the key principle when answering the question of whether or not persuasion has gone too far. It has gone too far if consumers are directed towards choices that are not in their interests. This will occur if consumers base their choices on incorrect, incomplete or false information, or if they are put under pressure to make split-second decisions, for example when buying something, because ‘only a few were available,’ whereas plenty were still in stock. We see these types of misleading practices both online and offline. However, businesses have far more tools online to take advantage of the moment or the individual’s situation than they have offline.

Consultation

The guidelines that ACM published today have been created with the help of representatives of businesses, consumers, and academics. ACM invites all interested parties to submit their opinions if they have any suggestions for improvement. Please submit your opinions no later than 16 January 2020 by sending them to beslisonline@acm.nl. ACM expects to release the final version of the guidelines in early-2020.

The digital economy on the 2020 ACM Agenda

Dutch society is undergoing fundamental changes as a result of digitalization. Businesses offer services and products that are now part of our daily lives. Digitalization produces enormous benefits and innovation, but it also carries risks. People and businesses should be protected against the risks of digitalization. They should be able to navigate online markets with confidence. The guidelines that ACM published today fit with the topic of the Digital Economy on our upcoming 2020 ACM Agenda.
 

See also

03-12-2019 ACM publishes for consultation the draft guidelines on the protection of online consumers