How dark patterns in online banking take you for a ride!

Most people think that online fraud is only committed by cybercriminals, but that’s not always the case. In today’s era, people are being deceived in various ways, and interestingly, the perpetrator of fraud is not always an outsider. It’s not necessary that only a thief defrauds you. Nowadays, dark patterns are being used to commit frauds. These are techniques used by large institutions to fit into their marketing tactics and exploit you. So far, e-commerce companies used such tactics, but now it’s also happening in the realm of online banking and other financial services. Here, we will see how dark patterns are being used in online banking space, and how you can protect yourself.

The name “dark pattern” itself implies its meaning. “Dark” refers to darkness and “pattern” means a set way of doing thing.  It’s called a dark pattern when a customer is kept in the dark and provided with incorrect or incomplete information. E-commerce companies have extensively used this tactic, but now it’s also being used in online banking. Sometimes, loans are given and everything  about interest rates are not disclosed.  sometimes a long list of hidden charges is levied, but, it is shown that everything is free of cost. Not only that, people are also trapped into acceptance of unwanted subscriptios.  These are all dark patterns used to deceive customers.

The consumer survey platform LocalCircles has revealed in a survey on dark patterns in online banking, that, approximately 63 percent of people had to pay hidden charges in online banking. Let’s explain this with the help of an example. A person takes a personal loan of 5 lakh rupees. A bank executive calls him and suggests to apply online quickly, and, he would  get a loan at an interest rate of 11 percent but it wasn’t disclosed that he would have to pay interest rates of up to 36 percent with different terms and conditions. The person realized this when he started paying EMIs.

In a sample survey conducted in 363 districts by Local Circles, 41 percent of users said they encountered interface interference. online banking platforms interfere during the time when the consumer makes transaction. They  push customers for additional product or service subscriptions or purchases. For example, when you try to pay your credit card bill on the bank’s website, the bank starts sending pop-up ads for loans or credit card upgrades. This means the customer cannot complete the bill payment task comfortably and on top of that, they have to repeatedly close unwanted messages. This is called Interface Interference meaning forcing of ads on you, coaxing you into purchasing unnecessary services.

In the survey, 32 percent of users experienced subscription traps. Subscription traps occur when consumers easily sign up for a new online product or service, but they are repeatedly charged for that service. They cannot easily cancel it even if they want to. To stop it, one has to go to the bank branch. Additionally, 39% of users faced cases of Bait and Switch. This involves offering of attractive interest rates on loans and deposits, but later it turns out that the interest rate is different. there are also many hidden charges to be paid.

The government is cracking down on dark patterns consistently. However, this hasn’t worked. Last year, RBI’s Deputy Governor M. Rajeshwar Rao cautioned against the use of dark patterns in digital loan offerings. He said people are being misled towards expensive loans. Seeing the increasing difficulties, in 2023, the Central Consumer Protection Authority or the CCPA, issued a gadget notification to protect consumers’ rights. It’s called “Guidelines for prevention and regulation of dark patterns”. It covers all platforms, advertisers, and sellers which provide goods and services in India.

Banking expert Amit Tanwar says that almost everyone is falling victim to dark patterns. People are being cheated via SMS, WhatsApp messages, emails, or direct calls. Sometimes customers are tempted with cheap loan offers, sometimes they are persuaded to subscribe to a service. it is  portrayed as extremely necessary cause. This way, people sometimes pay hidden charges, and sometimes get trapped in subscription traps. This problem isn’t very old because online banking became popular in India only in the last two decades. on one side, online banking has made banking easy, on the other side, these problems can undermine people’s trust in the technology.

Seeing this increasing threat, it is decided that RBI, banks, and all stakeholders will have to be more active. Although there may be a delay, it is hoped that the government, just as it has become strict with e-commerce companies, the government will also show  same strictness here. But, before the loopholes in rules and regulations are fixed, it is also necessary for customers to understand this issue.

To avoid dark patterns in online banking, it is necessary for the customer to inquire about all charges while applying for a loan. They should ask what the actual interest rate on the loan will be, the should demand written information about the annual percentage rate. It includes all types of costs including interest, processing fees, etc. Read all the terms and conditions. Many times, there is a star sign along with the terms and conditions. Pay attention to it. If you become a victim of any dark pattern, you can also complain about it. You can complain to the National Consumer Helpline by dialing the number 1915. you can also complain via WhatsApp at 8800001915.