Study finds 95% of listed firms using dark patterns; SEBI urged to act

A new study has found that over 95 per cent of publicly-listed companies involved in online consumer transactions use dark patterns—deceptive interface designs that mislead customers. The study, published by community platform LocalCircles on Tuesday, calls on market regulator SEBI to ensure that all listed companies and those planning to list in India eliminate such practices from their digital consumer journeys.

Dark patterns are manipulative design tactics that influence consumer decisions, often through subscription renewals, forced cancellation processes, inaccurate pricing, misleading consent mechanisms, and behavioural nudges. The LocalCircles study analysed over 300 platforms over the past 12 months, using consumer complaints and a proprietary AI-powered detection tool.

While the study did not name most companies that failed the test, it declared a few listed firms—Meesho, Jockey, Hamleys, Eco Mobility, and EasyMyTrip—as “dark pattern-free”. It also found that of 23 companies that claimed to be dark pattern-free after a self-audit and submitted a self-declaration to the Central Consumer Protection Authority (CCPA), only seven were actually free of deceptive practices.

The findings highlight the limitations of the current self-audit framework and underscore the need for stronger verification mechanisms. The study describes SEBI’s proposed Common Advertisement Code (CAC) as a positive step, calling for its adoption to ensure transparency in digital consumer transactions.

SEBI’s draft CAC, released in a consultation paper weeks ago, expressly prohibits dark patterns such as false urgency, subscription traps, hidden charges, confirm shaming, misleading default settings, and disguised advertisements. It also bans promotional inducements like cashback offers, trading vouchers, and free subscriptions designed to encourage trading or app downloads. The code aims to incorporate the CCPA’s 2023 guidelines for prevention and regulation of dark patterns.

If adopted, the CAC will apply to websites, mobile apps, advertisements, onboarding journeys, email campaigns, social media promotions, and investor communications of brokers, mutual funds, investment advisers, portfolio managers, depositories, research analysts, and other SEBI-regulated entities. The study says such measures are necessary to preserve consumer trust, corporate governance, and long-term business conduct.