Tech companies in breach could face fines up to six percent of their global revenue.
Europe just released a proposal for a new set of consumer protection rules called the Digital Fairness Act (DFA), the EU Commission wrote in a news release. The bloc is targeting practices that harm children and push people into spending more, including things like unclear pricing, addictive design features, ads aimed at minors and “dark patterns” like hard-to-cancel subscriptions. The penalty for non-compliance could be up to six percent of a company‘s annual revenue, according to the draft copy.
“Our consumer protection rules will help ensure that businesses compete on the merits of their products and services, not on their ability to exploit consumers or their ability to evade the rules,” said EU justice chief Michael McGrath in a statement. “We are not making it harder to do business, we are making it harder to do business unfairly.”
The act seeks to protect consumers in a number of ways, like banning dark patterns, forcing clear and transparent online pricing for cultural and sports events and allowing consumers to turn off “addictive design features that encourage excessive or compulsive spending. It would also restrict unfair practices that encourage overspending by minors, like pay-to-win in games (loot boxes) and persistent prompts.
The DFA also addresses influencer marketing, requiring transparency from content creators about commercial content. It would also take on unfair personalized ads and prices that target minors, while putting an end to “subscription traps” that are difficult to cancel.
The EC also proposed to shift enforcement power from member states to a more centralized system. It would give the Commission direct powers to investigate large-scale cases with a major impact on consumers, speed up and improve coordination with member states and strengthen enforcement against non-EU companies.
This could be seen as an attempt to remove the patchwork of enforcement that currently happens around Europe in countries like France. It could also be an attempt to tilt regulatory power away from Ireland, a nation that hosts major tech giants including Apple, Google, Meta and Microsoft. A recent report from UN experts raised concerns about the independence of Ireland’s privacy regulator, citing the risk of “undue influence” from tech firms hosted there.
