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BaFin considers dark patterns in trading apps and trading portals to be unlawful

By on November 24, 2022

On November 21, 2022, the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – “BaFin“) clarified in a statement that investment firms are not allowed to use dark patterns in trading apps or trading portals. Against this background, BaFin also published two new FAQs on the conduct of business rules for investment firms.

In BaFin’s opinion, dark patterns in digital decision worlds (“choice architecture“) violate the ban of misleading information and the principle of fairness and are therefore unlawful.

What are dark patterns?

Dark patterns are when individual buttons in apps or on websites have a significantly lower contrast, are grayed out or transparent compared to others, and are therefore less noticeable to users overall.

Such graphical designs (e.g., graying out or “making invisible” an active button area) are designed to lead the customer to make a particular decision when faced with an equivalent choice decision.

Legal background to the BaFin decision

Trading apps and trading portals typically offer investment services and ancillary investment services that require a license. They are therefore supervised by BaFin as investment firms within the meaning of Section 2 (10) of the German Securities Trading Act (Wertpapierhandelsgesetz – “WpHG“).

Investment firms are subject to the conduct of business rules of MiFID II, which have been harmonized under European law and implemented in Germany in Sections 63 et seq. WpHG:

  • According to the rules of conduct, all information that investment firms make available to clients must be fair and clear and must not be misleading (Section 63 (6) WpHG).
  • According to BaFin, the use of dark patterns can mislead customers and conceals important points in the process.
  • In a choice architecture of investment firms, the use of dark patterns therefore violates the prohibition of misleading information and the requirement of fairness pursuant to Section 63 (6) WpHG.
  • According to BaFin, the absence of an important and relevant button (e.g. to cancel a transaction) is also unfair and thus prohibited. Since the concealment of a decision-making option through dark patterns is already inadmissible, this applies all the more to the complete absence of such a button.

What does this mean in practice for investment firms?

As a result of BaFin’s classification, it is now inadmissible, for example, to display the button for completing a securities transaction in a high-contrast manner, while the button for canceling is designed to be less noticeable in comparison.

Equally inadmissible is, for example, the absence of a button for an important action option of the customer that is relevant in the choice architecture (such as canceling a securities transaction), even though another button is offered at the same time for the same decision situation (in this case, the execution of the transaction).

Investment firms are now called upon to check their online presence for such inappropriate designs. If BaFin has already identified dark patterns in trading apps through its own audits, it intends to address this promptly with the companies concerned.

Annabelle Rau
Annabelle Rau focuses on banking and financial services law, European financial supervisory law, and corporate law. Her advisory practice ranges from issues related to the regulation of traditional financial services to new FinTech business models, including crypto regulation. In addition, Annabelle Rau advises several listed companies on their general meetings and ongoing capital markets legal obligations.