From the Ontario Securities Commission:
The Ontario Securities Commission (OSC) published a new report that examines digital engagement practices and how those techniques are being used on investing platforms in ways that may not align with an investor’s best interests.
Digital Engagement Practices: Dark Patterns in Retail Investing highlights several areas of concern about how increasingly popular investing platforms may purposely include features that are advantageous to the business and are to the detriment of the investor.
Dark patterns are a type of digital engagement practice that employ user interface choices to coerce, steer, and/or deceive users into making decisions that benefit a business but may not align with clients’ best interests.
Dark patterns can disguise the cost of investing — such as hidden fees. They can also be used to obtain personal information without informed consent and can make it harder for an investor to withdraw funds or close an account. Additionally, the report sets out how regulators in Canada, the U.S., and the EU are responding to this emerging issue.
“Our research provides important insights for retail investors and regulators about the prominence of digital engagement practices by online investing platforms,” said Meera Paleja, Program Head of Investor Research and Behavioural Insights. “The OSC continues to explore the use of these practices, and we encourage registrants to consider how their clients’ investing decisions may be negatively impacted by their use.”
The OSC Investor Office partnered with the Behavioural Insights Team (BIT) on the study.