EU Digital Fairness Act wants accountability on gamification & design risks

The European Commission (EC) seeks to impose definitive rules on excessive spending on digital platforms and tighten the use of gamification mechanics that encourage the play and expenditure. New articles have been updated to the Digital Fairness Act (DFA) which seek to address “online practices that encourage excessive behaviours” such as spending or rewarding extreme game-play. “The Digital Fairness Act proposal allows EU authorities to tackle unfair practices in digital markets more effectively, ensuring that all traders play by the same rules. The DFA will protect consumers of all ages shopping and browsing for goods or services online.” In development and under consultation since 2022, the DFA is viewed as the EC ‘fitness check’ for all digital platforms serving mass market audiences. The aim of the framework is to “better protection for European consumers and fairer competition for businesses, which all in all are expected to save EU consumers up to €13.7bn a year”. Pillars of accountability Yesterday in Brussels, the Commission presented the ‘key novelties’ for the protection of European-wide audiences: Core pillars are: Clear and transparent pricing on all digital products/services – cost of purchases clearly displayed on platform and apps. Use of dynamic pricing, must be displayed by platform/apps on maximum pricing. A ban on manipulative marketing tactics by banning ‘fake/false claims’ or manipulative messaging. Modifications on addictive features: Let consumers switch off persistent spending prompts and ban gambling-like features for children, including pay-to-win and pay-to-progress. Influencers to declare advertising: Require clear labels on paid content and prevent campaigns from exploiting children’s trust. Restrict exploitative targeting: Clamp down on personalised adverts and pricing that target children or exploit sensitive personal data. End subscription traps: Make cancellation easier and tackle unwanted renewals and free trials that become paid subscriptions. Give customers access to human support and clearer rights when AI agents shop for them. Gambling exposures will require determination The DFA has been designed to preserve European member states’ authority to govern their own gambling markets. National governments and gambling regulators would retain responsibility for licensing requirements and laws related to operator conduct and duties. The Commission proposes no change to gambling autonomy. However, the DFA could overlap with existing national rules, particularly through its provisions on “fairness by design”. As detailed by the Commission – “Fairness by design, with the option for consumers to turn off addictive design features that encourage excessive or compulsive spending, such as persistent prompts. The proposal will also restrict unfair practices that encourage overspending, for example by banning gambling-like features for minors, such as pay-to-win and pay-to-progress.” For licensed operators, the question is how these general consumer protections would interact with gambling-specific requirements, particularly around marketing and digital engagement. National autonomy over gambling regulation does not settle how the DFA’s “fairness by design” requirements would apply to online gambling platforms. Their application must be assessed against specific platform features, including spending prompts, personalised promotions and engagement mechanics. That interaction requires examination provision by provision. Negotiations in both the European Parliament and Council will determine the final obligations and how they fit alongside national gambling rule. Operators warned of design risks The EC’s direction on platform fairness echoes concerns examined by SBC News in April, when lawyer Claire Pinson-Bessonnet, of Paris law firm CPB Avocats, discussed the growing regulatory focus on the architecture of digital environments. “We are moving towards a regulatory model where design is not neutral,” she told SBC. Pinson-Bessonnet referenced a broader shift towards examining how interfaces, prompts and personalisation influence behaviour, with potential implications for gambling as well as technology platforms. She also questioned safeguards whose effectiveness depended on consumers finding and activating them. Her assessment anticipated greater emphasis on protections embedded within products and their default settings. Those observations preceded the Commission’s proposal and were not a response to its publication. The distinction remains useful when assessing the new measures. Offering a control, making it accessible and protecting a child by default represent different levels of intervention. The practical debate will concern which standard should apply to each feature and audience. Brussels wants to be fairness enforcer Further changes have been applied to the text of the Consumer Protection Cooperation Regulation to give the Commission direct investigative and sanctioning powers in very large cases affecting consumers across the Single Market. Revisions including potential fines of up to 6% of worldwide annual turnover of platforms that fail to comply with main pillars of action. The revisions of the DFA principal framework seek to bring national consumer authorities together through the CPC Network, with the Commission given coordinating powers to apply EU-wide action. The proposed reform would add direct Commission enforcement for qualifying cases, improve procedural coordination and require non-EU traders to appoint an EU representative. The 6% figure therefore belongs to the enforcement initiative. It should not be interpreted as an automatic penalty for every disputed game feature or consumer complaint. The EC concluded with the following notice: ‘In today’s day and age, digital markets evolve rapidly. So do unfair practices, which are proliferating online and know no borders. “To keep our consumers safe and ensure businesses can compete fairly, we need to equip ourselves with the right tools to respond rapidly and effectively to breaches of consumer law.” A timetable is yet to be published on when the DFA proposals will be discussed by the European Parliament and European Council.