Rules on personalized online offers
Do you as a company personalize prices, offers, ads, the search results of third-party products, or your online environment? If so, you must be sufficiently transparent about this, and you cannot mislead consumers or exploit the vulnerabilities of consumers as a result of which they are unduly influenced. This may constitute an unfair commercial practice, which is prohibited.
Your company personalizes if you change your offers on the basis of characteristics or the behavior of a consumer or a group of consumers, for example setting a price or running an ad that depends on a consumer’s postal code or order history, or the ranking or personal offers that have been adjusted on the basis of a consumer’s browsing and order history. It may also involve an online environment (user interface) with personalized buttons, colors, pictures, and texts that have been adjusted on the basis of browsing history and specific information about the behavioral characteristics of consumers.
Personalization can help people. They might see products or information that they find relevant sooner. Products can also be offered at a lower price to consumers that have less to spend. However, consumers can also be unduly influenced in their purchasing and choice processes.
ACM assesses commercial practices that involve personalization from the perspective of the average member of the group of consumers that is targeted by the personalization. The more you personalize, the smaller the group of consumers will be that you are targeting, until you end up targeting an individual consumer. The question of whether a practice is misleading or involves undue influence may thus depend on the degree of personalization.
In addition to consumer protection law, other rules may also apply if you personalize. If you process personal data, you will also need to comply with the General Data Protection Regulation (GDPR). The Dutch Data Protection Authority (AP) enforces compliance with the GDPR. Also, make sure that your personalization does not illegally discriminate within the meaning of the Dutch General Equal Treatment Act (AWBG). In individual cases, the Netherlands Institute for Human Rights (CvdRM) decides whether or not a practice constitutes illegal discrimination.
Furthermore, as of 17 February 2024, online platforms will have to comply with the new rules laid down in the Digital Services Act. For example, they will have to explain how personalized recommendations are created, and what criteria are used in that process. On very large online platforms, consumers will also have to be able to opt for non-personalized recommendations. And it will be illegal for online platforms to present personalized ads using special categories of personal data such as racial or ethnic origin, religious or philosophical beliefs, or health. Also, online platforms will no longer be able to present personalized ads using the personal data of underage users of their service if they are aware with reasonable certainty that the user of their service is a minor.
What is required and what is not allowed?
Example: the personalized price of a television
An online electronics store runs the following ad: ”Create an account now so we can give you personal offers, and make it easier for you to place orders”.
Consumers with accounts sometimes get offers when they log into their accounts. The company offers consumers with accounts a discount on products. Consumers without accounts do not get the discount. Consumers with accounts see the following message next to the price of a television set: “Personal offer! Original price: 299 euros. Just for you: 255 euros.”
However, consumers with accounts sometimes also see a higher price for certain products than do consumers without accounts. Those prices do not clearly indicate that the price has been personalized.
This is not allowed. The company must inform consumers actively that prices have been personalized. It can do so, for example, by adding a message near the personalized price, such as: “We offer you this product at a price that we have determined on the basis of your current location and your recent searches. This price can be different from those presented to other customers.’
- Title 3, section 3A of the Dutch Civil Code, Book 6 (Unfair commercial practices) (in Dutch)
- Section 230m of the Dutch Civil Code, Book 6 (information obligations for distance contracts) (in Dutch)
- Regulation (EU) 2022/2065 - Digital Services Act
- Dutch General Equal Treatment Act (AWBG)
- General Data Protection Regulation (GDPR)