Chapter 28: Legislation in the United States

Like the EU, the United States also has a number of existing laws that cover deceptive patterns. In a 2022 staff report, the FTC stated that it intends to take action against companies that use deceptive patterns when they violate the FTC Act, ROSCA, TSR, TILA, CAN-SPAM, COPPA, ECOA (plus other statutes and regulations).¹ These are the main federal laws that the FTC sees as relevant to deceptive patterns.

The Federal Trade Commission Act

The Federal Trade Commission (FTC) Act doesn’t mention anything about deceptive patterns, but that’s because it was enacted over a hundred years ago in 1914. Even so, it has lots of good stuff in it that prohibits unfair or deceptive practices in commerce, and so it can be used to address deceptive patterns indirectly. This law also established the FTC as the agency responsible for enforcing the law. Much of the FTC’s work is done under section 5 of the FTC Act which prevents unfair and deceptive acts and practices. The test for unfairness consists of three elements:

• Substantial injury: The practice causes harm to consumers, or is likely to do so.
• Not reasonably avoidable: The injury must not be reasonably avoidable by consumers.
• Not outweighed by benefits: The injury must not be outweighed by countervailing benefits to consumers or competition.

In the words of former FTC commissioner Rebecca Slaughter at the Computers, Privacy and Data Protection conference in 2022²: ‘That is a complicated test… That’s why we’ve used [the provisions for] deception more, because it is an easier test to meet!’ The deception test is simpler, which Slaughter cheerfully summarises as ‘Don’t lie about what you’re doing – with data or otherwise – or we will sue you’. The deception test consists of three elements:

• Representation, omission, or practice: There must be a representation, omission, or practice that is likely to mislead the consumer.
• Reasonable consumer: The representation, omission, or practice must be examined from the perspective of a reasonable consumer in the given circumstances.
• Materiality: The misleading representation, omission, or practice must be material, meaning it is likely to affect the consumer’s decision regarding the product or service.

To summarise: by applying the tests for deception or unfairness, the FTC can investigate and take enforcement actions against businesses using deceptive patterns that mislead or harm consumers, thus protecting consumers and promoting fair competition.

Other US federal laws

A number of other federal laws indirectly relate to deceptive patterns. For example:

• ECOA (1974): Equal Credit Opportunity Act is a federal law that prohibits lenders from discriminating against borrowers on the basis of race, colour, national origin, religion, sex, marital status, age, or receipt of public assistance. The ECOA does not cover deceptive patterns directly, but it is possible for deceptive patterns to be used in a manner that is covered by this law, such as misdirection or hidden costs in loan or credit application forms.
• COPPA (1998): Children’s Online Privacy Protection Act is a federal law that requires websites and online services to obtain parental consent before collecting personal information from children under the age of 13. COPPA does not cover deceptive patterns directly, but it is applicable when deceptive patterns are used to violate its rules, such as misdirection to falsely achieve parental consent, or other tricks and traps that impact children’s privacy.
• ROSCA (2010): Restore Online Shoppers’ Confidence Act is a federal law that requires online merchants to obtain a customer’s express informed consent before charging them for goods or services. It contains two provisions regarding the hard to cancel deceptive pattern (which it refers to as deceptive or unfair ‘negative option’ subscription practices). Specifically, all terms of the subscription – including renewal frequency and price – must be clearly and conspicuously disclosed to the customer before obtaining the consumer’s billing information (they can’t be tricked into a subscription); and a provider must offer a simple mechanism to cancel a negative option subscription...