Brussels takes on the evils of online commerce

Brussels is set to tackle unfair online commerce practices with the introduction of the Digital Fairness Act (DFA). Presented by the European Commission on Wednesday, the new law aims to address a range of consumer issues that have arisen over the past two decades on the internet. The DFA will target a variety of practices, including dynamic pricing, cumbersome cancellation processes, and the reliance on automated customer service.

Spanish lawmaker Laura Ballarín Cereza emphasized the need for Europe to reject a digital economy where profits are derived from exploiting people's vulnerabilities.

The new regulation will focus on several aspects of online business interactions with consumers. The Commission will have the authority to impose fines of up to 6% of a company's global annual revenue for violations. This penalty structure is similar to those under the Digital Services Act, which targets platform harms, such as election interference and the restriction of minors from violent content.

Deceptive design tactics, known as "dark patterns," will be banned under the DFA. These manipulative techniques, which include prominent buttons designed to induce purchases, will also target personalized pricing that exploits vulnerable consumers, such as minors. Dynamic pricing, a practice of adjusting prices based on factors like demand and location, will also face restrictions under the new law. Transparency in pricing for products with fluctuating rates will be required.

Additionally, the DFA addresses "agentic commerce," the use of AI agents to complete purchases. While some lawmakers believe the requirement should ban dynamic pricing for cultural and sporting events entirely, the proposed rules mandate that a human customer service representative be available for post-purchase support. Specific provisions have been included for online gaming, prohibiting practices that allow children to pay for progression in the game, and implementing opt-out features for addictive mechanisms by default.

Consumer groups argue that existing rules, some of which date back to 2005, are insufficient in addressing unfair design practices, which continue to persist. The new law will apply to any business that offers services to EU consumers online.