Financial authorities have moved to regulate 'dark patterns' that deceive consumers during the sale of financial products. This comes in response to concerns that some financial companies are engaging in unhealthy sales practices by inducing financial product subscriptions through applications or complicating the cancellation process.
According to the financial sector on the 13th, financial authorities are conducting research to establish regulations on dark patterns in financial products and are listening to opinions from the financial sector. The research conducted by the Korea Financial Consumers Protection Foundation (Financial Foundation) is reportedly nearing completion.
Dark patterns refer to actions where corporations trick consumers into purchasing unnecessary products or services online. Typical examples include automatic payments being made without asking whether to continue the subscription after a free trial period ends, or making the cancellation process complicated.
An amendment to the Electronic Commerce Act that prohibits dark pattern practices will take effect on the 14th, but financial products are not included. This is why financial authorities have initiated separate regulatory measures.
Recent research by the Financial Foundation indicates that various forms of dark patterns are occurring in the financial sector. Among the types, there are instances where additional services like subscriptions are pre-selected and provided during the process of signing up for financial products or services. There are also actions that involve multiple confirmation steps during the cancellation process, or making it so there are no separate cancellation methods, forcing customers to go through customer service to cancel.
In the case of insurance products, it has been found that offerings emphasize urgency by continuously showing policies subscribed to by individuals of the same age group on mobile or computer screens. The Financial Foundation noted that acts like setting time limits or notifying users of other people's activities to induce product subscriptions could also fall under dark patterns that lead to irrational decision-making by consumers.
For deposits and loans, dark patterns include not disclosing the effective interest rate and only displaying the maximum rate available, or hiding unfavorable information such as interest income tax. There were also cases where the 'automatic investment' option on financial company apps was activated, causing a specific amount to be automatically invested unless the user cancelled it. Instances where the name of the my data service was changed to 'find my hidden money' to attract members were also found.
The Financial Foundation pointed out that the Financial Consumers Protection Act mainly regulates sales actions occurring in face-to-face interactions, making the application to issues arising from online sales, such as dark patterns, unclear. The Financial Foundation has indicated that there is a need to amend the Financial Consumers Protection Act to regulate dark patterns. Financial authorities are also poised to pursue legislative amendments if necessary.
Financial authorities have decided to prepare regulations on dark patterns based on industry opinions and research results. However, it is reported that there is significant deliberation in finalizing the regulatory approach and scope of application. Overly regulating dark patterns could restrict non-face-to-face financial services and hinder consumer benefits. Financial authorities plan to first establish guideline-level regulations and later discuss legislative amendments.