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Recently, the German Federal Financial Supervisory Authority (BaFin) issued guidance stating that investment firms are not permitted to use dark patterns in trading apps or trading portals, prompting the use of dark patterns already identified. announced to intervene. Additionally, other existing and upcoming EU legislation restricts the use of dark patterns and applies to businesses other than investment firms. Most EU businesses are subject to at least some dark pattern rules. Also, using dark patterns in online interfaces such as apps and homepages can be a violation. many law. Against this background, companies should immediately review their current practices and digital interfaces. This legal update details the various prohibitions and possible sanctions.
“Dark Pattern”
A dark pattern is a design element (such as button size or color) or process (such as unsubscribing from a service) that can obscure, mislead, or deceive users in an online interface.
For example, two dark patterns criticized by BaFin based on their review of trading apps have a strikingly designed button to complete a transaction, but no or barely perceptible button to cancel a transaction. That’s it. A similar argument revolves around cookie banners, which require website users to click multiple buttons. For example, to avoid having to accept all cookies.
Relevance of BaFin guidance for investment companies outside Germany
Other investment firms operating in the EU should be aware of BaFin’s guidance. It is part of the Code of Conduct for Investment Companies and is based on section 63 (6) sentence 1 of the German Securities and Exchange Act (WpHG) which implements Article 24 (3) sentence 1 of European Directive 2014/65/EU. I’m here. (MiFID II) into national law. Other European supervisory authorities may also view the use of dark patterns as unfair and misleading within the meaning of Article 24(3) sentence 1 of MiFID II.
Other Prohibitions Under EU Law and Application Outside Investment Firms
Other existing and upcoming EU legislation focuses on the use of dark patterns and applies to more companies than just investment firms.
For example, the European Data Protection Board (EDPB), in its March 2022 ‘Guidelines for Dark Patterns in Social Media Platform Interfaces’, states that the use of dark patterns is a legal requirement under the GDPR, including the principles of fairness and transparency. It stipulates that it may violate data processing requirements. (Article 5(1)(a) GDPR) and Information Obligations Under Article 5(1)(a) GDPR. 12 (1) Sentence 1 GDPR. Additionally, consent to data processing may be revoked if induced by operational design choices. This also applies to consent for online marketing or online tracking methods (e.g. tracking pixels) under the e-Privacy Directive (2002/58/EC), as the consent requirements are the same as those relating to consent in the GDPR. may be
In the context of B2C e-commerce, the use of dark patterns may be further restricted by the Consumer Rights Directive (2011/83/EU) and the Unfair Commercial Practices Directive (2005/29/EC). “Guidelines on Unfair Business-Consumer Business Practices,” December 2021. Depending on the specific dark pattern applied.
Additionally, the recently adopted Digital Services Act (DSA) has a broader scope addressing the specific interfaces of online platforms. This means that platform providers, such as social networks and marketplaces, do not use online interfaces in a way that intentionally or effectively distorts or impairs the ability of recipients of their services to make informed and autonomous choices or decisions. designing, organizing, or operating the (See Article 25). The DSA will enter into force on November 16, 2022 and will apply from February 17, 2024.
Beyond the EU – dark patterns in the US
Dark patterns aren’t the only ones taking notice of EU legislators and regulators. In the United States, regulators such as the Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB) have issued guidance and enforcement actions related to dark patterns, a type of “deceptive” behavior under U.S. law. Announced. For example, in September 2022, the FTC will announce what it calls “dark patterns,” including practices such as providing a list of the “best products” but not disclosing that the rankings are based on payments made by product manufacturers. We have released a report outlining the various practices the authorities consider. Key terms in locations consumers are unlikely to see, and design elements that lead to fraudulent billing. Enforcement actions related to dark patterns have also resulted in hefty fines, including a lawsuit against the game maker in December 2022 that fined him $245 million. Kids played with it and it was sold as free.
possible sanctions
Using dark patterns can subject companies to severe sanctions under multiple laws. for example:
- WpHG: Sanctions for violating section 63 (6) sentence 1 WpHG fines up to €5 million or 10% of total annual turnover (for legal entities/associations) or twice the profit derived from the infringement may lead to
- GDPR: Violation. GDPR 5 or 12 can lead to fines of up to €20 million or 4% of a company’s global annual turnover, whichever is higher.
- DSAs: Failure to comply with obligations under the DSA can result in fines of up to 6% of the platform provider’s worldwide annual turnover.
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