Understanding the EU’s Digital Fairness Agenda: What to Expect

Over the past 20 years, people’s lives have become increasingly connected to the digital world. Nowadays, consumers handle many of their daily tasks online, whether it's buying groceries, booking tickets for a concert or a flight, or ordering from sites like Amazon or Bol. Daily life is blending seamlessly with the online world.

Digitalisation brings many benefits but also some significant risks for consumers. This has sparked concern among policymakers, academics, and the public about certain practices and designs. There are signs that the EU is preparing to respond to these concerns by introducing a “Digital Fairness Act,” aimed at promoting more balanced and fair online practices.

At the end of 2022, the Commission launched an evaluation (the so-called ‘Fitness Check’) to assess whether amendments are needed to several legislative frameworks aimed at protecting consumers, particularly the Unfair Commercial Practices Directive (UCPD), the Consumer Rights Directive, and the Unfair Contract Terms Directive.

The findings of this evaluation are expected to be released in the coming months. The Commission will outline the evidence supporting the need for further legislation, which could affect various sectors, including e-commerce, social media, streaming services, dating apps, and video games. Depending on the findings, the new College of Commissioners could put forward a legislative proposal as early as 2025 in the form of a “Digital Fairness Act.”

What the Commission is looking into

The Fitness Check aims to evaluate the adequacy of current EU regulations in addressing consumer protection issues, including consumer vulnerabilities, dark patterns, personalisation practices, influencer marketing, contract cancellations, subscription service contracts, marketing of virtual items, and the addictive use of digital products. But what do these issues entail?

Consumer vulnerabilities

The UCPD defines vulnerable consumers based on factors such as mental or physical infirmity, age, or credulity. A potential Digital Fairness Act may revise this definition to include new criteria or introduce a general prohibition on exploiting consumer vulnerabilities. Discussions are underway about recognising digital vulnerability as a standard condition due to inherent digital imbalances, potentially creating a separate regulatory standard for online environments and shifting the burden of proof from consumers to businesses.

Dark Patterns and Addictive Design

Dark patterns are manipulative design techniques used in digital interfaces to deceive or coerce users into making choices they might not otherwise make. Examples include infinite news feeds or misleading subscription renewals. The European Parliament’s 2023 own initiative report called for new legislation to address manipulative design practices. Potential measures could include banning attention-seeking features, such as misleading pop-ups, dialogue bubbles, or endless scrolling, and enhancing user protection in virtual environments.

Personalised Pricing and Recommendations

Personalisation practices include targeted pricing on e-commerce platforms and tailored content recommendations on streaming services. A European Commission study published in 2018 has noted how personalised pricing and recommendations, influenced by psychographic profiling, can misalign with consumer preferences. There is a push to prohibit such personalised pricing and offer non-personalised options, with concerns about privacy and the effectiveness of shelved initiatives like the "Cookies Consent Pledge."

Influencer marketing

The role of online influencers and their impact on consumers, especially seen in sponsored content and product placements across social media, has gained significant attention, with recent actions by the French government and the Council of the EU. Recommendations from both include defining influencer marketing, standardising disclosure requirements, and protecting minor influencers. The recommendations also call for advocacy for media literacy programmes and responsible behaviour codes, which could guide future EU policies and regulations.

In-App and In-Game Purchases

In-app and in-game purchases, including virtual currencies and loot boxes, are also under scrutiny in the Fitness Check. Proposed measures include mandatory disclosure of real-world costs, transparency about loot box probabilities, and setting spending limits. More drastic measures are being considered, such as the default disabling of in-game payments and banning loot boxes, especially when accessible to minors.

Automatic Subscription Renewals and Contract Cancellations

Future legislation is likely to mandate reminders for automatic subscription renewals and facilitate easier contract cancellations for services like streaming platforms and digital subscriptions. The European Commission is considering introducing user-friendly online functionalities for withdrawal and cancellation rights. While some online marketplaces have voluntarily adopted these practices, there is debate about the specifics of these obligations and their potential impact on innovation and costs.

Interested in learning more? Contact us!

At Fourtold, we specialise in navigating the complex landscape of digital regulations, privacy, cybersecurity, AI, and consumer protection. Our team has the expertise to help you adapt to emerging regulations and policy shifts, ensuring your organisation remains ahead in leveraging the opportunities of the evolving digital landscape.

For further information on how we can assist you in adapting to and benefiting from the latest developments in digital fairness and consumer affairs, don’t hesitate to contact Leonardo Veneziani at [email protected].