Companies risk fines of 6% global turnover for unfair digital trade practices, EU draft law shows

EU Proposes 6% Turnover Fines for Unfair Digital Trade Practices, Draft Shows

Overview of the Digital Fairness Act Proposal

By Foo Yun Chee

BRUSSELS, Nov 9 (Reuters) - Companies found guilty of using unfair digital trade practices to push people to buy more or target children with personalised advertising risk fines of as much as 6% of annual global turnover, according to a European Commission draft law seen by Reuters.

Legislative Process and Background

The Commission's Justice chief Michael McGrath will present the proposed legislation known as the Digital Fairness Act (DFA) on Wednesday, which will need to be thrashed out with EU countries and the European Parliament before it can become law.

The DFA is the latest legislative push by Europe to get Big Tech, e-commerce and social media giants to do more to police content on their platforms.

Key Provisions of the Digital Fairness Act

Ban on Dark Patterns

It would ban so-called business-to-consumer "dark patterns" — deceptive or manipulative interface designs on websites and apps that steer people into buying more — as unfair commercial practices, the document said.

Restrictions on Personalised Advertising

The Commission also wants to ban personalised advertising targeting children or vulnerable consumers.

Transparency in Dynamic Pricing

Companies using dynamic pricing, where ticket prices fluctuate based on real-time demand and which has triggered criticism from consumers, will be required to be more transparent by disclosing the number of items available at the advertised price.

Control Over Addictive Features

Traders will have to give users the opportunity to switch off addictive features that encourage compulsive or excessive use, the document said.

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Finance Watch's Perspective

Finance Watch, which campaigns for the public interest in financial services rulemaking, said the proposed legislation does not do enough to protect consumers investing online.

Concerns Over Consumer Protection

"The proposals on dark patterns go in the right direction, but they lack ambition to sufficiently protect consumers in financial services," said Peter Norwood, senior research and advocacy officer at Finance Watch.

(Reporting by Foo Yun Chee; Editing by Jan Harvey)