Protecting Consumer Rights in the Digital Era

Every year on March 15, the world celebrates Consumer Rights Day, an occasion that reminds every citizen, national or global, of their right to safeguard their interests against any kind of consumer malpractice. This year's global theme of the day is 'Fair and Responsible AI for Consumers, which further lays emphasis on the need to remain vigilant of one's consumer safety with the advent of technology and artificial intelligence. As the Central Consumer Protection Authority recently opened its draft guidelines to prevent and regulate the practice of 'greenwashing' to public discussion, we bring you the myriad aspects of consumerism, underlining the imperative of being responsible consumers.

Greenwashing

Referring to the act of deceiving customers by marketing a company's products or policies as eco-friendly, when the reality contradicts the same. This false marketing tactic includes exaggerated claims about the environmental benefits of a product or service, or using misleading terms, symbols, or imagery under the guise of environmental responsibility. Capitalising on the consumer's conscious effort to adopt green and eco-friendly options over the synthesised products in the market, several manufacturers today portray a green vision without actually substantiating the same. 

Dark patterns

Dark patterns are a phenomenon that represents manipulative design tactics used by businesses to influence user behaviour in ways that may not align with their best interests. Exploiting the principles of psychology and user interface design to subtly deceive consumers into taking actions that benefit the company, often at the expense of the consumer's autonomy or financial interests. Some commonly adopted dark pattern techniques are drip pricing, disguised advertising, bait and switch, false urgency, etc.

Shrinkflation

A form of hidden inflation, the term Shrinkflation refers to the minimalistic reduction of the size of the product in the market while retaining its price. A rampant issue across the globe, shrinkflation is often a result of rising production costs, such as the increase in the cost of raw material ingredients, energy commodities and labour wages. To keep up with this, a large chunk of producers resort to this method to improve their profit margin, without making it evident to the consumer. Another reason that contributes to shrinkflation is the cut-throat market competition. With a multitude of substitutes available in the market, especially in the food and beverages industry, manufacturers side with this mal-practice to retain their customers while ensuring profit margins in their sales.

Consumer Rights guidelines on advertisements

The Central Consumer Protection Authority (CCPA) under the Department of Consumer Affairs released 'Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022' in an effort to curb deceptive advertisements and prevent the exploitation of customers by brands. Several advertisements make use of unsubstantiated and false claims, exaggerated promises and misinformation to swindle customers while violating various consumer rights including the right to information, the right to choose and the right to safeguard oneself against unsafe products and services. These are as follows:

Bait advertisements

A bait advertisement is a marketing strategy employed by advertisers to draw in consumers with attractive offers, often at an exceptionally low price or with the offer of freebies or discounts. However, the primary goal of a bait advertisement is not to sell the advertised product or service at the advertised price but to draw consumers into the store or onto the website in the hopes of upselling them to more expensive items or services.

·         Reasonable prospect of sale: The advertisement must not entice consumers to make purchases unless there is a reasonable likelihood that the advertised goods, products or services will be available for sale at the offered price.

·         Adequate supply: The advertiser must ensure that there is a sufficient supply of the advertised goods, pro-ducts, or services to meet the foreseeable demand genera-ted by the advertisement. This means that the advertiser should have enough stock available to meet consumer demand.

·         Disclosure of availability: The advertisement must disclose any reasonable grounds the advertiser has for believing that they may not be able to supply the advertised goods, products, or services within a reasonable period and in reasonable quantities.

·         Avoiding misleading market conditions: The advertise-ment must not mislead consumers about the market conditions regarding the goods, products, or services, or their availability. This includes not inducing con-sumers to purchase the goods, products, or services under conditions less favour-able than normal market conditions.

Free claim advertisements

A free claims advertisement is an advertisement that promotes goods, products, or services as being offered to consumers at no cost or without charge. However, there are specific criteria and regulations outlined to ensure that such advertisements are transparent and do not mislead consumers. Here's a detailed view of the same:

·         Absence of additional costs: The advertisement must clearly state that consumers will not incur any charges other than the unavoidable cost of responding to the advertisement and collecting or paying for the delivery of the item. This means that the advertised item must genuinely be provided free of charge, without hidden fees or expenses.

·         Clarity of commitment: The advertisement must provide clear information about the level of commitment required from the consumer to take advantage of the free offer. This includes disclosing any conditions or requirements that consumers must fulfill to receive the free item, such as signing up for a trial, providing personal information, or completing a survey.

·         Exclusion of certain costs: The advertisement cannot describe goods, products, or services as free if certain costs are imposed on the consumer. This includes costs associated with packing, packaging, handling, or administration of the free item. Additionally, any increase in the cost of response, such as the price of other goods or services that consumers must purchase to avail of the offer, must be unrelated to the cost of promotion.

·         Avoidance of misleading claims: The advertisement cannot mislead consumers by describing an element of a package as free if it is already included in the package price. Similarly, the term "free trial" cannot be used to describe offers where a non-refundable purchase is required or for offers that involve a "satisfaction or your money back" arrangement.

Advertisements for Child Consumers

The provisions laid down on advertisements targeting children are designed to protect the sensitivity and vulnerability of young minds and to ensure that advertising does not harm children's well-being. Here's a low down of some key pre-emptive provisions:

·         Prohibition of exaggerated claims: Advertisements targe-ting children are forbidden from exaggerating the features of products or services in a manner that could lead children to have unrealistic expectations.

·         Scientific substantiation: Any health or nutritional claims or benefits made in advertisements targeting children must be adequately and scientifically substantiated by a recognised body. This requirement ensures that children are not misled by false or unproven claims about the healthiness or nutritional value of products.

·         Restrictions on endorsements: Advertisements targeting children are prohibited from featuring personalities from the fields of sports, music, or cinema for products that either require a health warning under the law or cannot be purchased by children. This prevents the use of celebrity endorsements to promote products that may be harmful or unsuitable for children.

The role of AI in ensuring consumer safety

Artificial intelligence has been rampant in all aspects of the development of humankind. A study conducted by the United Nations in 2022 found that about 80% of the youth interact with AI multiple times a day. With the emergence of AI hazards such as deepfakes and misinformation, a need for innovative AI solutions is being realised to create a secure and transparent marketplace environment for consumers as well as businesses.

Pushing this effort, the United Nations Guidelines for Consumer Protection has vehemently pressed upon the need for ethical AI by focusing on the three aspects of AI development.

Construction- Ethically sourcing data, with emphasis on consumer consent and a transparent approach towards developing a product.

Distribution-Prioritising consumer welfare, disclosing risks and allowing independent verification through open and closed models.

Responsibility- Focusing on foolproof procedures for the resolution of issues, holding accountability and establishing redressal mechanisms across industries and government.

With millions of humans using generative AI regularly, technology assumes a significant role in the way we function. However, being a double-edged sword, AI can tremendously enhance consumer care, improve redressal methods and at the same time, impact the safety of consumers.

Fostering a culture of responsible consumption and promoting consumer rights education are crucial in addressing the complex challenges that are manifested by the dark side of consumerism, however, the need of the hour is to empower oneself as smart consumers to make informed choices. By advocating for fair and transparent business practices, we can strive towards creating a marketplace that prioritises consumer welfare and upholds ethical standards.

Compiled by: Kaushikee, Sudhit Mishra, Induja, EN Team

Source: PIB, News on AIR