Subscription traps to hidden charges: Dark patterns are plaguing the UPI boom

62% of respondents fell victim to bait-and-switch tactics. Here, platforms lure users with cashback offers that are never actually delivered after completing transactions

Digital payments through downloaded apps have now become a part of day-to-day lives of Indians. From paying wayside vendors to making purchases at the local stores to recharging phones, booking tickets, millions use UPI (Unified Payments Interface) payments. However, a recent survey by LocalCircles reveals a concerning trend -  the prevalence of "dark patterns" employed by online payment platforms.

What are dark patterns?

The manipulative practices used by platforms have been called out as dark patterns by the Government of India. The Government via the Central Consumer Protection Authority (CCPA) has identified 13 types of dark patterns which include false urgency, basket sneaking, confirm shaming, forced action, subscription trap, interface interference, bait and switch, drip pricing, disguised advertisement, nagging, trick questions, SaaS (software as a service) billing and rogue malwares. As per the CCPA notification, dark patterns amount to misleading advertisement or unfair trade practice or violation of consumer rights.

LocalCircles conducted a nationwide survey with over 45,000 responses from users across India.  The findings shed light on the pervasiveness of dark patterns:

Hidden Charges: Over half (52%) of respondents reported encountering hidden fees associated with transactions, not disclosed upfront but deducted later. Topping up wallets with hidden charges emerged as a frequent complaint.

Subscription Traps: A staggering 67% of users faced difficulty removing or delinking their bank accounts linked for UPI payments, a classic "subscription trap" tactic. Despite safeguards put in place by the RBI it continues. 

Bait-and-Switch: Another dark pattern noticed on some online payment platforms is Bait and Switch under which the users are offered a cashback scheme for making extra transactions or adding more money to the wallet but never paid

the incentive. Luring users with cashback offers but never delivering them was a common experience for 62% of respondents, highlighting the "bait-and-switch" tactic.

Forced Actions: While UPI transactions are supposed to be free, 41% of respondents have shared that they experienced the Forced Action approach where either their funds in the online wallet up to a certain amount were blocked or they were forced to share their contact list to use the wallet payment service. 

The Need for Regulatory Intervention

As the Indian digital payment ecosystem expands, there is need for regulators like the RBI and CCPA to step in and ensure that this ecosystem is free of dark patterns.