LocalCircles, an independent community and research platform, that represents the voice of the collective and enables government departments to drive policy and enforcement interventions that are in the public interest, has written a letter to the markets regulator, the Securities and Exchange Board of India (Sebi) Chairman, Tuhin Kanta Pandey, urging him to ensure that all the publicly listed companies remain free from deceptive online practices known as “dark patterns.”

The dark patterns include false urgency, basket sneaking, confirm shaming, forced action, subscription traps, interface interference, bait-and-switch tactics, drip pricing, disguised advertisements, nagging, trick wording, SaaS billing, and rogue malware.

The letter reads: "I would like to bring to your attention the fact that many of the companies seeking to go public have online platforms that have dark patterns, which are deceptive design tactics used to mislead users into taking actions they might not otherwise choose, often involving hidden costs, deceptive advertising, or confusing interfaces."

Sachin Taparia, Founder and CEO of LocalCircles, further emphasised the rising threat of dark patterns. These are online techniques used by websites and apps to deceive users, such as false urgency, subscription traps, and hidden fees.

The letter also mentioned that the Central Consumer Protection Authority (CCPA) had already declared 13 such tactics as unfair trade practices in a gazette notification released in November 2023. However, Taparia warned that many companies planning to go public continue to use these tactics on their digital platforms.

The formal letter was also addressed to Finance Minister Nirmala Sitharaman, Consumer Affairs Minister Pralhad Joshi, and Secretary Nidhi Khare.

“8 in 10 high-volume platforms used by Indian consumers still have between three and ten dark patterns,” Taparia wrote, citing findings from a year-long AI-powered study by LocalCircles covering over 270 major platforms.

In the letter, Taparia also warned that if these companies list on Sebi-regulated stock exchanges, they will gain wider access to consumers, who will then be more vulnerable to manipulative interfaces. According to him, this could damage investor trust and confidence in the long term.

To address this, he also suggested a straightforward solution in the letter: Sebi should require each listed or about-to-be-listed company with online consumer interfaces to submit an annual declaration confirming that their websites and apps are free of the 13 dark patterns identified by the CCPA.

"We would like Sebi to ensure that any company with online platforms, which is seeking to go public or is already public, provides an annual “dark pattern free” undertaking to Sebi, where the Board of Directors confirm that their consumer or public-facing interfaces like websites and apps do not use the dark patterns identified by CCPA," per the letter.

According to Taparia, such a move will ensure that any publicly listed company in India is free of deceptive business practices and has high consumer protection and higher standards of trust among shareholders. He also offered Sebi his full cooperation, providing the data and analysis needed to support such enforcement.