Dark patterns in business
Dark Patterns are tricks used in websites and apps that make you buy or sign up for things that you didn’t mean to. Dark patterns in business are the analogy for this in the way the businesses operate and price their products. These are two examples I have noticed that often come up and become moral dilemmas for companies which are seldom solved in an ideal way.
This is when a company screws over people who don’t have the energy, time or knowledge to know better — most often old people and uneducated people.
Description: When businesses with a subscription or lock-in model (e.g. telco companies, electricity companies, banks, pension funds etc) improve or discount their product, they don’t automatically apply these improvements in functionality or price to their existing customers. In fact, most of the time they purposefully avoid informing their existing customers about their new, better offer so they can continue making more money off them. In financial services they call newer customers “front book” and older ones “back book”. It’s a common dilemma whether to migrate their “back book to front book” — this is why you should regularly renegotiate interest rates on loans and bank account fees as well as switch credit cards.
Example: ask your grandparents what bank or pension fund they use and when they last switched. Now google that bank or pension fund and try find the latest offer for the product that they are using. Odds are that if your grandparents haven’t switched in the last year, there will be a cheaper and better alternative on offer right now from their current provider. Their bank/pension fund hasn’t automatically informed them or migrated them because that would mean they would get less revenue and/or have to provide more benefits, thereby decreasing profits. This is also the same reason that most of these types of businesses will offer you big discounts to stay if you call them to cancel your account/subscription. They can afford to give you a discount because they are probably just moving you to the same price that they are already giving to all new customers!
Why it’s unethical: In business, this type of dynamic is condescendingly called the “lazy tax” because it’s said to only affect those that are too “lazy” to constantly be hunting for the best offer. I think a more truthful name would be the “old, disabled or uneducated tax”. This type of dynamic disproportionally hurts society’s weakest and poorest layers.
This is when a company exploits the fact that people underestimate how often they forget things or make simple mistakes.
Description: A company attracts customers with a great deal that is conditional on the customer remembering to do something seemingly trivial (e.g. unchecking some small checkbox on a web-page, printing a physical boarding pass or turning off data roaming when overseas). The company sets the “penalty” price of failing to remember so high that even if only a few customers fail, the company can still make enough money to finance the low prices that attract more customers.
Example: when you book tickets with Ryanair, if you forget to check in online and print your own physical boarding pass, you will be charged a “boarding pass reissue fee” of between 15–45€ at the airport check-in counter. There is, of course, a legitimate reason for Ryanair to do this: to speed up the check-in process at the airport and reduce their labor costs. But I think the main reason they do this is because people tend to underestimate how likely they are to make this mistake and therefore won’t mentally include the cost of doing so into the price of their ticket. In this situation, Ryanair is betting that at least some proportion of people will be attracted to their cheap tickets, forget to print their boarding passes and then have to pay a big fee, effectively subsidizing the tickets of all the people that don’t forget to print their boarding passes.
Why it’s unethical: This process is designed to exploit the fact that we are bad at estimating how likely we are to forget things. Since Ryanair can measure this likelihood accurately over thousands of customers, they are using this information asymmetry to their advantage, effectively shuffling cost away from the displayed price into a hidden category that people mistakenly think that they can avoid.