Report Reveals Widespread Hidden Charges And Deceptive Practices In Online Banking

A recent report by the community platform LocalCircles has revealed alarming trends in the online banking sector, with six out of every ten users reporting encounters with deceptive practices such as drip pricing and hidden charges. The findings shed light on the prevalence of what are termed 'dark patterns', manipulative tactics employed by websites and apps to deceive consumers.

According to the report, respondents to the survey recounted instances where hidden charges, not disclosed upfront, were later debited from their accounts. Drip pricing, a particularly insidious practice, involves initially presenting low prices for products or services, only to incrementally increase them towards the end of a transaction by adding hidden fees. This tactic preys on consumers' trust and transparency in online banking transactions.

The survey, which amassed responses from over 44,000 users across 363 districts in India, underscores the widespread nature of these dark patterns within the online banking landscape. These patterns encompass various strategies aimed at manipulating consumers into making purchases or commitments, often by concealing crucial information or trapping them into recurring subscriptions.

One of the most concerning revelations of the report is the prevalence of'subscription traps', experienced by 32 percent of online banking users surveyed. This deceptive practice involves enticing consumers to sign up for a new product or service online, only to lock them into recurring charges with limited options for cancellation. Such tactics not only exploit consumers' lack of awareness but also erode trust in online banking platforms.

Furthermore, the report highlighted the 'bait and switch' approach encountered by 39 percent of banking users. This tactic involves advertising attractive offers, such as high-interest rates on deposits or loans, to lure customers. However, upon completing the transaction, consumers often find that the terms and conditions differ from what was initially promised. This duplicitous practice undermines the integrity of online banking services and leaves consumers feeling deceived.

Moreover, the report revealed that four in ten customers ended up purchasing products or services they did not originally seek, due to disruptive tactics employed by some online banking platforms. By manipulating the flow of transactions, these platforms coerce users into unintended purchases, exacerbating the issue of consumer exploitation in the digital realm.

The findings of the report have prompted calls for regulatory intervention to address these unethical practices and protect consumers' interests. Reserve Bank of India (RBI) Deputy Governor M Rajeshwar Rao has previously raised concerns about the emergence of 'dark patterns', describing them as a new form of mis-selling. Rao emphasized the need for vigilance against technology-induced frauds and urged regulatory bodies to take proactive measures to safeguard consumers.

In response to these revelations, regulatory bodies and policymakers must collaborate with industry stakeholders to implement robust measures that promote transparency, accountability, and consumer empowerment within the online banking sector. This may include stricter enforcement of disclosure requirements, enhanced consumer education initiatives, and proactive monitoring of dark pattern practices.

Ultimately, the report serves as a wake-up call for financial institutions and online banking platforms to prioritize ethical conduct and consumer-centric practices. By fostering a culture of transparency and integrity, these entities can rebuild trust and confidence among users, ensuring a safe and equitable digital banking experience for all.