The European Commission has proposed fines of up to 6% of a company’s annual global turnover for businesses engaging in unfair digital trade practices, including manipulative online sales techniques and personalised advertising targeting children.
The proposed Digital Fairness Act (DFA) seeks to strengthen consumer protection by addressing practices that encourage excessive spending, exploit users’ behaviour or make it difficult for consumers to exercise their rights when using digital services.
EU Justice Commissioner Michael McGrath said the proposed legislation was intended to ensure that businesses competed on the quality of their products and services rather than their ability to exploit consumers or circumvent regulations.
“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,” McGrath said.
Speaking at a press conference on Wednesday, he rejected concerns that the proposed legislation would impose unnecessary restrictions on businesses. “We are not making it harder to do business, we are making it harder to do business unfairly,” he said.
The proposed legislation seeks to prohibit so-called dark patterns, which are digital design techniques that manipulate users into making decisions they might not otherwise take. It also targets addictive design features in digital products, misleading influencer marketing, problematic pricing practices and subscription traps that make it difficult for consumers to cancel services.
According to the European Commission, these practices cost consumers billions of euros every year.
The DFA forms part of a wider European Union effort to strengthen oversight of major technology companies and online platforms, requiring them to take greater responsibility for practices occurring through their services. The proposal also seeks to expand consumer rights in an increasingly digital marketplace, particularly where businesses use personalised advertising and behavioural techniques to influence purchasing decisions.
However, the proposed legislation has attracted criticism from some businesses, which have raised concerns about potential overlaps with existing regulations and other European initiatives governing online services. These include a separate proposed plan to protect children from online dangers by restricting social media access for those under the age of 13.
The Commission’s proposal will now require approval from EU member states and the European Parliament before it can become law. Negotiations are expected to take place over the coming months, during which the scope and requirements of the legislation will be subject to discussion.
If adopted, the legislation would establish a stronger framework for addressing unfair commercial practices in digital services, with companies potentially facing substantial financial penalties for violations.
