Proposed EU Digital Fairness Act targets addictive design, 'dark patterns' and unfair personalisation

The European Commission's long-awaited Digital Fairness Act proposal, published on 11 November, reaches beyond digital services to all consumer-facing businesses, with reforms covering practices from infinite scrolling and virtual currencies to influencer promotions and personalised prices.

The proposal would repeal and replace the Unfair Commercial Practices Directive (UCPD) with a directly applicable regulation, retaining  general consumer protections while adding in specific digital fairness provisions. Alongside a proposed revision of the Consumer Protection Cooperation Regulation, it would also grant direct enforcement powers to the European Commission. An accompanying Simplification Directive proposes targeted amendments to the Consumer Rights Directive to simplify its application online.

Businesses would have a year to adapt after the regulation becomes law, but the timetable depends on its passage through the European Parliament and the Council of the EU.

Consumer protection scope

The proposal covers all business-to-consumer commercial practices before, during and after a transaction, both online and offline. The definition of “product” now includes digital services and digital content, while “commercial practice”, as before, encompasses conduct directly connected with their promotion, sale or supply. 

The definition of “transactional decision” would expressly include whether to continue using a product, not just whether to buy it. The recitals, which explain the proposal, call for the term to be interpreted broadly, covering related decisions such as entering a shop or continuing to scroll in a digital setting. Traders' initial consumer engagement strategies could therefore attract scrutiny in future. 

The recitals also envisage payment including benefits in kind and, in relevant circumstances, personal data rather than money. The regulation includes new definitions for "online interface" and "online marketplace". New definitions for "paid-for virtual currencies", "paid-for variable reward systems", and "pay-to-progress and pay-to-win mechanisms" would bring in-game or in-app purchases within its scope.

The Commission says that the proposal complements the Digital Services Act (DSA), General Data Protection Regulation (GDPR), Artificial Intelligence  Act and proposed EU KIDS Act. It seeks to exclude or distinguish intersecting provisions, butthere is still potential for overlap, which may make it difficult to navigate the wider digital regulation framework. 

Unfair commercial practices

The general prohibition on unfair commercial practices from the UCPD remains. Misleading or aggressive commercial practices contrary to professional diligence that materially distort, or are likely to materially distort, the average consumer's economic behaviour continue to be unfair. Practices that breach the new digital fairness obligations would also be unfair.

On the meaning of "average consumer", the recitals state that, in respect of the online environment, the term may be altered by impaired concentration resulting from "information overload" or limited digital literacy, as well as the influence of cognitive biases. According to the recitals, both should be taken into account when considering "average consumer".

The proposal would also extend the concept of the vulnerable consumer to expressly encompass any specific misfortune or circumstance of such gravity as to impair their judgement, alongside disability, age and credulity. The recitals give financial distress and addiction as examples. As before, exploiting any vulnerability through commercial practices is prohibited, based on what the trader could reasonably foresee or is aware of, and is assessed by reference to the average member of affected consumers. 

The recitals refer to a new "fairness-by-design" principle, requiring traders to take consumer protection requirements into account when devising commercial practices, although this is not linked to specific provisions in the regulation.

The proposal would expand the list of practices considered unfair in all circumstances. Additions include misleading price-reference comparisons, drip pricing, not disclosing a discount period, and making misleading dropshipping claims.

'Dark patterns'

The proposal would prohibit designing, organising or operating "online interfaces" in ways likely to deceive or manipulate consumers, or otherwise materially distort their behaviour. The term covers software that provides consumers with access to products, including websites and apps, and the prohibition extends to both visual and auditory elements of the interface.

The proposal blacklists ten "dark patterns" considered unfair in all circumstances, which the Commission would have the power to update. The list includes false availability or popularity claims; persistent messaging throughout the ordering process creating an impression of product scarcity; defaults that consumers have to reject; inferred consent to payment for additional products; price, contract duration and automatic renewal information presented less prominently than other material information; sending fake notifications to encourage consumers to re-engage with a platform or site; and making it difficult for consumers to refuse, withdraw or change a choice they have made. 

The recitals provide examples, including making choices that favour the trader more prominently, burying material information behind excessive click-through steps, or making a choice the consumer might make produce an unexpected result. 

Addictive design

The proposal would introduce particular requirements concerning the monetisation of digital services and specific features that may encourage excessive use or spending. Services would be required to make available effective, easily accessible tools that allow consumers to disable certain specified features where the digital products are intentionally designed or operated to encourage compulsive or excessive use, or such outcome is reasonably foreseeable. 

TheCommission would be empowered to amend the list of features, which comprise includes automatic playback and uninterrupted consumption without effective, regular opportunities to reconsider continued use. It also includes notifications not triggered by, or not directly related to, the user's interaction with or activity on the service.

Incentives to engage regularly or more frequently would also be covered, including penalties or lost benefits for failing to do so. The list also covers simulated interpersonal relationships that encourage continued use, such as persistent prompts to continue engaging with an automated system.

This is a consumer "opt-out" requirement, not a blanket ban on particular functionality. The Commission is clear that features encouraging compulsive or excessive use should not be available at all to minors, as envisaged by the safety-by-design provisions in the EU KIDS ACT. As these features can also harm adult consumers, they would also be able to reject them. The proposal explicitly excludes traders already subject to the proposed EU KIDS ACT in relation to practices concerning children. Providers of educational or scientific services under the KIDS ACT are also excluded.

Influencer marketing

“Influencer marketing” means a commercial practice in which traders use their popularity with an audience to promote products, directly or indirectly, in exchange for payment, which includes gifts, invitations and other benefits in kind. 

The aim of the proposal in this area is to ensure that influencer marketing is fair, in that the nature of the commercial relationship is made explicitly clear to consumers. The proposal requires disclosure labels to be applied to each commercial communication to make obvious its commercial intent clearly, prominently and unambiguously. Only two types of label would be permitted: “advertisement” or “commercial collaboration”. 

Traders engaging in influencer marketing would also not be able to directly urge children to buy products or persuade adults to do so, disguise commercial intent, or suggest that unsuitable products are appropriate for children. Marketing dangerous products, or products whose advertising is prohibited under EU or national law, would be banned. Brands, agencies and other traders that use influencers would be responsible for ensuring their marketing services comply with these provisions either through contract or "other appropriate means",.

Personalised advertising and pricing

The proposal would prohibit profiling-based advertising using personal data where the trader knows with reasonable certainty that the consumer is a child. It would also prohibit using special category data for profiling-based advertising.

The recitals envisage these prohibitions applying where the personalised advertising takes the form of personalised content suggestions, product rankings and recommendations and other types of promotional targeted messaging, including in natural-language systems, and would cover all providers that facilitate targeting as well.

Personalised pricing based on profiling would also be banned where it is reasonably likely to harm a consumer nd the trader knows with reasonable certainty that the consumer is a child or that the consumer is vulnerable because of age, credulity, disability or personal circumstances. This is not a general ban on personalised prices. 

The recitals preserve beneficial discounts and recognise that harmful pricing can sometimes involve lower, not higher, prices. Traders would not be obliged to process additional personal data to assess age or vulnerability and the existing rules under the GDPR and the DSA would remain unaffected.

In-app spending and unfair marketing

The regulation would also introduce controls on in-app spending and unfair marketing to address concerns about certain features in digital products, such as video games. 

Products bought with paid-for virtual currencies would have to be accompanied by monetary values or estimates. These do not include points collected through loyalty schemes. Paid-for virtual currencies would have to be disabled by default for child users where the products are targeted at them or the trader knows with reasonable certainty that children use them. Only once a parent or guardian has approved their use, can they be activated for children. 

Paid-for variable reward systems, such as virtual items offering random rewards or variable odds, including loot boxes, would require disclosure of available rewards and probabilities, plus tools to disable them. Again, they must not be offered to children.

Pay-to-progress and pay-to-win purchases, defined as necessary or presented as necessary for in-game or in-app progress or success, would also be prohibited for children.

The proposed Simplification Directive defines "micro-transactions" and simplifies their pre-contractual information requirements. "Micro transactions" are contracts for digital content not supplied in tangible form and concluded within an existing digital services contract between the same trader and consumer. They must provide additional content or features intrinsically linked to the service’s performance and involve payment of no more than €50 or the equivalent in a virtual currency used by the trader.

Digital contracts

To address problems associated with some digital contracts, including so-called "subscription traps", the proposal covers requirements for free trials, automatic renewals, contract termination, and after-sales services

It proposes notification requirements when free trial periods are offered in digital contracts, so that consumers are informed when the trial period is coming to an end and they have the right to terminate or continue on a paid basis at that point. 

Auto-renewal reminders for digital contracts would be required to contain automatic extension provisions so that the consumer is aware in advance of the upcoming auto-renewal date and can make a choice to terminate or continue with the supply.

A digital contract termination button labelled "terminate contract here" or similar and positioned on the "online interface" would also allow consumers to terminate the contract easily.

The regulation also proposes requirements to ensure that, if a consumer so requests, a human is available to provide after-sales customers services if other means of communication, such as email and instant messaging, are ineffective.

The proposed Simplification Directive also introduces specific withdrawal rules for subscription contracts for audio and video content where consumers expressly request immediate access to the content.

Consumers would have one month to withdraw, rather than 14 days, and would pay the average monthly price specified in the contract, calculated over its full duration. Traders would still have to provide access until the end of the initial month. 

The directive also reduces information on withdrawal rights requirements for digital content purchases where consumers agree to receive the content immediately and acknowledge the loss of their withdrawal right.

Event tickets

Fairness in the events sector is also addressed, with the proposal including rules on price transparency in invitations to purchase. If the price of the ticket is liable to increase, either due to actions taken by the trader or because of automated processes, such as dynamic pricing, the trader must prominently disclose how many tickets in the relevant category are available at the advertised price, as well as the maximum price a consumer might have to pay. 

If virtual queues are used, in any sector, the trader will also have to prominently display real-time price information.

Ticket resellers would need to display clearly and prominently, in the invitation to purchase, the original total price charged by the event organiser and, where applicable, the ticket category row and seat number.

Agentic AI and automated contracting

Specific provisions apply to traders supplying automated systems, such as AI agents, to consumers in order to conclude contracts on the consumers' behalf. These include requirements allowing consumers to choose whether they want to view and confirm contracts proposed by the agent before entering into them.

The proposal would also prohibit traders from designing their interfaces to require consumers to use an automated system to access or conclude commercial transactions.

Osborne Clarke comment

The EU Digital Fairness Act proposal is broadly in line with expectations and covers subjects that had already been flagged in the Commission's Digital Fairness Fitness Check and its subsequent consultations. However, it also contains various new provisions, including provisions on automated contracting and events tickets.

The proposed regulation excludes provisions that overlap with other EU legislation, such as the EU KIDS ACT and the DSA. However, other overlaps remain. The proposal does not distinguish its provisions on personalisation practices from other EU laws that also govern this area. Businesses could face rules spread across various instruments, adding complexity to compliance. 

The consequences of non-compliance with certain requirements are potentially severe, as the Commission can use its direct enforcement powers to impose fines of up to 6% of global annual turnover for breach.

The proposed regulation now goes to the European Parliament and the Council of the EU for their input, which will take time. Once the regulation becomes law, traders will have 12 months to prepare before it comes into effect.