WIK-Consult supported the Centre for Strategy and Evaluation Services (CSES) together with EY, Tetra Tech, Asterisk and LE Europe with the review of EU consumer protection law on digital fairness. The consortium reviewed three important EU consumer directives, namely the Unfair Commercial Practices Directive 2005/29/EC, the Consumer Rights Directive 2011/83/EU and Directive 93/13/EEC on unfair terms in consumer contracts including the amendments made by the Modernisation Directive (MD) 2019/2161.
WIK-Consult supported by providing extended case studies on personalized advertising and pricing, including literature review, interviews with stakeholders and website sweeps to assess compliance.
On personalisedadvertising, we concluded that despite the presence of existing rules requiring consumer consent and transparency when advertisements are personalised, compliance has been patchy, and the manner in which it has been implemented has not in practice enabled consumers to make truly informed choices. Consumers should therefore be provided with a clear option that does not involve personalization (including in advertising). The research also points to a worrying lack of transparency in the online environment regarding search rankings and hidden advertising e.g. in the context of influencer marketing.
On personalisedpricing, we concluded that personalised prices and offers are not a problem per se, but certain practices are problematic. It may be worth considering whether these practices should be explicitly prohibited. The same applies for profiling, especially when applied to children. Furthermore, care is needed in balancing the desire for even more transparency with the risk of information overload and impact on the user experience. Consumers’ comprehension of how personalization is applied may become even more difficult with the increased use of algorithms and deployment of AI.
For both aspects it is noted that the MD made significant improvements, but further action is needed to protect consumers and empower them to make informed decisions. The industry itself should also do more to ensure compliance and there is scope for consumer protection authorities to take more concerted action. To facilitate compliance, it is also suggested to streamline the variety of rules and prohibited practices regarding profiling and personalization to make implementation and enforcement less complex.
