Universities – New Zealand law lags where dark patterns target the vulnerable – UoA

Source: University of Auckland – UoA

Researchers are exploring how dark patterns exploit vulnerable consumers, and what New Zealand law can do about it.

Several of the world’s most powerful social media giants, including Meta and YouTube, are on trial in the US over claims their apps were designed to be harmful to young people. For University of Auckland law academics Professor Jodi Gardner and Dr Joshua Yuvaraj, the case connects closely with their research into manipulative advertising, vulnerable users and New Zealand law.

In the chapter Manipulative Advertising and Vitiating Factors, which features in a forthcoming book examining how laws in the Asia-Pacific region are transforming in response to the digital world, the researchers look at the role ‘dark patterns’ play in manipulative advertising.

Dark patterns are digital design tactics intended to confuse users, make it difficult to express their true preferences, or manipulate them into taking certain actions.

There are different types of dark patterns that can influence purchases, for example, forced action, obstruction, sneaking an item into a basket, and scarcity or urgency messaging. These practices are objectively unfair to all consumers, and the researchers say they’re relatively straightforward to recognise and regulate.

Their chapter, however, focuses on a more complex dark pattern: identifying people with potential vulnerabilities, such as by tracking their search habits, and then exploiting these through targeted ads or pop-ups.

The researchers call this ‘vulnerability exploitation’.

“The harm in question doesn’t come from the content of the advertisement itself, but from the fact that it purposefully targets people who are vulnerable and may agree to purchases not in their best interests,” they write.

Gardner and Yuvaraj use three case studies to highlight how vulnerable groups can be targeted by manipulative advertising: children urged to buy online game add-ons before a countdown ends, financially illiterate or disadvantaged people encouraged to invest in digital assets, and women anxious about fertility targeted by egg-freezing companies.

The authors argue that the heightened vulnerability of such groups to dark patterns underscores the need for better consumer protections.

Another issue when it comes to manipulation in gaming is the use of ‘loot boxes’, says Yuvaraj. This is where players can open a virtual crate or similar item, without knowing in advance what kind of game feature or ‘loot’ they will receive. One New Zealand gamer described becoming addicted to the thrill of opening loot boxes and spent about $16,000 doing so.

The Department of Internal Affairs has so far rejected calls to include loot boxes in the definition of gambling, and the researchers say their regulation and that of other in-app purchases will likely need to come under the Fair Trading Act.

Yuvaraj and Gardner say protections in the Act to directly address the exploitation of vulnerable consumers should be expanded. They advocate supplementing ‘statutory unconscionability protection’ with broader ‘unfair practices’ provisions, as seen in recent European Union and Singapore reforms.

They say expanding New Zealand’s statutory consumer protection framework to directly cover ‘vulnerability exploitation’ could bear fruit, as shown by a €1.125 million fine ($NZD2.2 million) given to Epic Games in the Netherlands for targeting children with in-app purchases in the popular game Fortnite.

Another avenue to improve the law in this area is to expand court-developed protections so they better fit modern, app-based and standard-form contracts, and Yuvaraj says courts could intervene when a person’s vulnerability or lack of meaningful choice affects their ability to agree to or understand the impact of a contract or transaction. This could include situations where a business should have been more alert to a person’s vulnerability, or where there’s a power imbalance.

“Given how quickly new technologies are developing that can cause harm to people, such as AI deepfakes, it’s critical to ensure New Zealand’s legal framework is set up to protect the most vulnerable members of society,” he says.