The digital age is driven by algorithms, complex sets of instructions shaping our online experiences in unseen ways. From social media feeds curated to our preferences to search engine results tailored to past searches, algorithms influence where we click, what we buy, and even the information we see. While these algorithms offer undeniable benefits, their lack of transparency raises concerns about fairness, competition, and most importantly, consumer rights. We delve into the challenge of algorithmic opacity in India’s burgeoning digital landscape, exploring its implications for consumer protection. We draw potential solutions from international efforts like the UK’s Digital Markets, Competition, and Consumers Bill (DMCC) and the EU’s General Data Protection Regulation (GDPR) juxtaposing them with the objectives of Consumer Protection Act 2019.
Consumer in the Dark: The Dangers of Algorithmic Opacity
Algorithmic opacity refers to the difficulty in understanding how algorithms make decisions. These complex systems are often shrouded in secrecy, making it challenging for consumers to understand the rationale behind the results they receive. This lack of transparency can lead to several potential harms to consumer rights enshrined in the Consumer Protection Act, 2019”
- Discriminatory Pricing: Opaque algorithms that analyze consumer data for personalization may lead to discriminatory pricing practices. Consumer Protection Act 2019 addresses discriminatory pricing under Section 2(41) and Section 2(47), prohibiting restrictive and misleading trade practices, including “manipulation of price”. [1] However, no explicit provision exists, let alone a provision addressing discriminatory pricing due to algorithmic manipulation.
- Manipulated Choices: Opaque algorithms can filter or prioritize content in ways that limit exposure to diverse viewpoints and potentially manipulate consumer choices. This can create “echo chambers” where users are primarily exposed to information that reinforces their existing beliefs, hindering access to a wider range of products and services. This could infringe on a consumer’s right to information under Section 2(11) of the Consumer Protection Act 2019, which prohibits “deliberate withholding of relevant information by such person to the consumer.”
- Algorithmic Bias: Biased algorithms can perpetuate discrimination against certain groups. For instance, an algorithm used for loan approvals might unconsciously favor applicants with specific educational backgrounds or geographic locations, unfairly disadvantaging others with equal qualifications. Such algorithmic bias can also include refusal to sell or render services on arbitrary grounds which can lead to “virtual compartmentalization.” [Gupta & Krishnan, 2020; Sen, Dasgupta, & Gupta, 2020]
These are just a few examples of how algorithmic opacity can infringe upon consumer rights enshrined. The lack of transparency surrounding algorithmic decision-making not only raises concerns about fairness and equity but also erodes consumer trust in digital platforms.
The Indian Legal Landscape: A Call for Transparency
India’s digital space is experiencing rapid growth, with millions of users engaging with various online platforms daily. However, the current legal framework lacks dedicated provisions for algorithmic transparency. While existing legislations like the Consumer Protection Act 2019 and the Information Technology Act establish a foundation for consumer protection in the digital sphere, their focus is broader and doesn’t explicitly address the issue.
A 2024 survey by LocalCircles with 44,000 responses from users of online banking located in 363 districts of India, found that approx. 6/10 users battled dark patterns such as hidden charges, ‘bait and switch’ tactics, and subscription traps among other algorithm-related issues. [2] While the Consumer Protection Act 2019 addresses some of these concerns, the lack of transparency surrounding algorithmic decision-making, such as in product recommendations or pricing, makes it difficult for consumers to understand if they are being treated fairly.
For instance, a 2023 Reserve Bank of India (RBI) report on Trend and Progress of Banking in India highlighted the growing use of Artificial Intelligence (AI) and algorithms in the banking sector, particularly for loan approvals and credit scoring. [3] However, the lack of algorithmic transparency within the IT Act’s framework makes it difficult for individuals to understand the rationale behind loan rejections or potential biases within the algorithms used for creditworthiness assessments. [4]
The Path Forward: Empowering Consumers in the Digital Age
While India grapples with a nascent framework for algorithmic transparency, exploring potential solutions within the existing legal framework and incorporating insights from international efforts can empower consumers:
- Strengthening the Consumer Protection Act: Amending the Consumer Protection Act 2019 to include specific provisions for algorithmic transparency can provide a legal basis for consumers to challenge discriminatory pricing, manipulated choices, and algorithmic bias. This could involve mandating platforms to disclose the criteria used for ranking, recommendation, and personalization algorithms.
- Inspiration from GDPR: The European Union’s GDPR offers valuable insights. Article 22 of the GDPR grants individuals the “right to explanation” regarding automated decisions based on profiling, empowering them to request an explanation for algorithmic decisions that impact them. [5]
- Inspiration from DMCC Bill: The UK’s DMCC Bill offers a framework for regulating large digital platforms designated as “Strategic Market Status” (SMS) firms. [6] Section 20(3) of the DMCC Bill empowers the Competition and Markets Authority (CMA) to impose conduct requirements on SMS firms to prevent them from:
- Applying discriminatory terms, conditions, or policies to certain users.
- Using market position to treat own product favorably than those of competitors.
- Restricting interoperability between their services and those of other undertakings.
- Unfairly using data.
- Restricting user choice.
Conclusion
In conclusion, the challenge of algorithmic opacity demands a consumer-centric approach. By strengthening the existing Consumer Protection 2019, to include specific provisions for algorithmic transparency, consumers will be better equipped to challenge discriminatory practices, manipulated choices, and algorithmic bias. By learning from international models and adapting existing legal frameworks, India can take concrete steps to empower consumers and ensure a more transparent and responsible digital ecosystem that upholds their rights.
[1] Consumer Protection Act, 2019, Act No. 35 of 2019.
[2] Consumers Report Multiple Dark Patterns on Online Banking Platforms, LocalCircles, https://www.localcircles.com/a/press/page/dark-patterns-ecommerce.
[3] Report on Trend and Progress of Banking in India, RBI, https://rbi.org.in/Scripts/AnnualPublications.aspx?head=Trend+and+Progress+of+Banking+in+India.
[4] The Prospects and Dangers of Algorithmic Credit Scoring, ISEAS – Yusof Ishak Institute, https://www.iseas.edu.sg/wp-content/uploads/2021/01/ISEASEWP2021-1Lainez.pdf.
[5] Regulation (EU) 2016/679.
[6] Digital Markets, Competition and Consumers Bill, Bill 294.