CMA’s Ruling on Online Choice Architecture: What E-Commerce Businesses Should Learn

In 2023, Citizens Advice revealed a staggering figure: consumers spent nearly £2.1 billion on items they didn’t want, need, or later regretted over the course of a year. This spending was largely driven by manipulative online choice architecture – a design strategy used by websites that push consumers into making decisions they might regret.

What is Online Choice Architecture?

Online choice architecture refers to the way options are presented to consumers on a website, including their display and arrangement. For example, ranking search results helps users find what they’re looking for more easily, or placing popular items at the top of a list can encourage users to choose those options.

However, depending on their design, these techniques can also be used to manipulate or mislead consumers. Here are some examples:

• Drip pricing: where the final price only becomes clear at the end of a purchasing process.
• Intrusive default settings: options that automatically enrol users in services unless they actively opt out.
• Misleading opt-outs: difficulty in cancelling subscriptions, services or rejecting unwanted add-ons.
• Complicated navigation: designing menus to make it hard for users to find or select alternative choices.
• Misleading labels: using terms that exaggerate or misrepresent the options available.

How Using These Techniques Can Impact Your E-Commerce Business 

The UK’s Competition and Markets Authority (CMA) recently took action against an e-commerce website for employing misleading techniques, resulting in a significant overhaul of its online sales practices and a commitment to refunding over £4 million to customers. The CMA’s investigation uncovered several unfair practices, including:

• Misleading urgency claims: using countdown timers and phrases like “In High Demand” to create a false sense of urgency, pushing consumers to make quick decisions.
• Hidden charges and pre-ticked boxes: automatically enrolling customers into VIP memberships and other services through pre-ticked boxes, leading to unintended purchases.

Following the investigation, the online provider agreed to:

• Using accurate countdown timers: timers must not mislead consumers or create a false sense of urgency. The platform will remove misleading countdown timers that suggest customers need to act quickly to avoid missing out.
• Honest marketing claims: all claims about product scarcity and popularity must be truthful and reflect real stock levels and demand.
• Refunding VIP Membership fees: customers who were automatically signed up for VIP memberships or other services via pre-ticked boxes will be refunded in credit, with the option to convert it into cash. The platform will also stop using pre-ticked boxes to ensure customers make informed choices.

These examples highlight how practices that might seem minor can be deemed misleading, depending on your website’s context and design. Regularly reviewing your online sales practices is crucial, as small changes can have significant legal implications. Seeking expert legal advice can help identify potential issues and ensure your practices comply with regulations, helping you avoid unwanted investigations and fines.

How can Logan & Partners help?

Cases like this show how important it is to be transparent and fair in your online sales practices and to have them reviewed by legal experts. Logan & Partners offers expert legal advice to ensure your e-commerce practices comply with regulations in the UK, EU, and the US. We can:

• Review your sales practices: review your online sales strategy and identify any areas that may be considered misleading or non-compliant.
• Provide guidance: offer insights into best practices and legal requirements to help you avoid pitfalls.
• Assist with compliance: help implement changes to ensure your practices align with regulatory standards and avoid penalties.
• Support in Legal Matters: provide representation and support if you face investigations or legal challenges related to your e-commerce practices.

If you’re unsure about whether your online practices are compliant or need help with regulatory issues or questions, don’t hesitate to reach out and book a free initial consultation.

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