Competition watchdog to target online retailers and ‘dark patterns’

Joseph Brookes
Senior Reporter

Australia’s consumer regulator will target online marketplaces and sellers trying to manipulate customers using “dark patterns” over the next 12 months under new chair Gina Cass-Gottlieb, who has called for tougher penalties and more proactive safety mechanisms.

Ms Cass-Gottlieb, who replaced former chair and digital platform critic Rod Sims in March, named online marketplaces among the regulator’s top three product priorities for the coming year in a speech on Thursday.

She added that the regulator won’t shy away from emerging challenges like online advertising either, after securing a $44.7 million penalty against Trivago in April for misleading consumers with complex algorithms.

ACCC chair Gina Cass-Gottlieb

Speaking at the Australian Competition and Consumer Commission’s National Consumer Congress in Sydney on Thursday, Ms Cass-Gottlieb announced the watchdog’s product safety priorities for the coming year and called for a less reactive model of protection and tougher penalties for breaches.

In addition to children’s product safety and battery hazards, online marketplaces are a top priority for the regulator, she said.

“The shift toward online shopping underway before the pandemic has only accelerated,” Ms Cass-Gottlieb said.

“We will conduct online surveillance of, and continue engagement with, online marketplaces, expand the benefits of the Product Safety Pledge that a growing number of online platforms have committed to, and contribute to greater consistency of international practices.”

Australia’s Product Safety Pledge is a voluntary initiative which commits online businesses to certain product safety responsibilities and reporting. Online giants Amazon Australia, eBay Australia and have been signatories since it launched in 2020 in response to rapid ecommerce growth.

Australia relies on the voluntary commitment in the absence of a general safety provision that prohibits the sale of unsafe goods, something which is common in other developed countries. It means the ACCC identifies safety issues once they are already in market or in some cases when a consumer has already been harmed.

Ms Cass-Gottlieb and the ACCC wants Australia to adopt the more proactive approach instead.

“The introduction of a general safety provision that incentivises manufacturers to ensure their products are safe would allow us to move away from this reactive model and to more effectively take enforcement action for unsafe products,” she said.

The watchdog will also continue to probe online ads, misleading practices and the so-called “dark patterns” that attempt to exploit or pressure consumers into purchases.

The Consumer Policy Research Centre last week released research on dark patterns in Australia, finding they are prevalent and often influence consumers to spend more and hand over more personal information online.

Ms Cass-Gottlieb said the manipulative and deceptive advertising and marketing practices in the digital economy will be an “area of focus” for the ACCC.

“While these advertising and marketing techniques are not new, we are seeing technology make them more sophisticated, prevalent, and able to distort or disregard consumer choice,” she said.

“The ACCC’s recent case against Trivago, focussed on the use of algorithms to mislead consumers and is an excellent example of the ACCC’s ability to tackle complex emerging practices.”

The regulator took Trivago to court, successfully arguing the hotel price aggregation site had misled customers through its advertising and ranking algorithm, which favoured that paid the company higher cost-per-click fees.

Buoyed by the decision, and similar large penalties levied against Volkswagen ($125 million), Telstra ($50 million) and the Australian Institute of Professional Education Pty Ltd ($153 million), the ACCC chair said the regulator will “continue to seek significant and increasing enforcement penalties against businesses for breaches of the Australian Consumer Law”.

The ACCC’s product safety priorities work in conjunction with its compliance and enforcement priorities, which were released in March.

Do you know more? Contact James Riley via Email.

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