The rise of e-commerce has fundamentally transformed marketing strategies, reshaping the relationship between businesses and consumers and increasingly blurring the boundaries between commercial and social engagement within platform-based economies.

Firms now routinely employ technological design features and system functionalities, enhanced by advanced artificial intelligence capabilities, to capture and maximise consumer attention on digital platforms.

In these environments, user attention, time spent and patterns of engagement are converted into valuable, privileged and highly personalised datasets that support targeted marketing practices and, in some cases, enable data monetisation.

Free online services’ business model is driven by access to and exploitation of our personal data, information, and behavioural insight, with the sole objective of optimising commercial practices for economic gains.

Without realising, these systems record virtually every interaction and behaviour around the clock, generating highly valuable datasets.

These data are then continuously segmented and analysed, as deemed appropriate, to subject users to ongoing testing and targeted interventions designed to optimise the platform’s operations and the relationships among consumers, advertisers, and sellers.

Use of digital technology and data analytics

The use of digital technology and data analytics becomes a new source of power imbalance between businesses and consumers.

With the ongoing drive toward digitalisation, existing consumer vulnerabilities intensify and digital vulnerability surfaces, leaving consumers increasingly unable to protect themselves.

The EU Consumer Protection 2.0: Structural Asymmetries in Digital Consumer Markets Report 2022 describes digital vulnerability as “a universal state of defencelessness and susceptibility to (the exploitation of) power imbalances that are the result of increasing automation of commerce, datafied consumer-seller relations and the very architecture of digital marketplaces.”

In the digital markets, vulnerability is built into the architecture itself. The choices we make in our daily digital routine environments are designed to detect – and even manufacture – vulnerabilities.

Whether these vulnerabilities are dispositional or situational, they are not accidental side effects of digital consumer markets; they are the very outcome that those markets produce.

Thus, digital vulnerability is not limited to specific groups of online consumers, such as children, the elderly, consumers with disabilities, over-indebted consumers or individuals with low digital literacy or digital disadvantage, but is instead a universal condition.

Vulnerability seen as the norm than exception

In a digital environment, all consumers are inherently vulnerable, so vulnerability should be seen as the norm rather than the exception.

The technology itself constitutes a fundamental source of vulnerability, especially through the deployment of artificial intelligence and other associated technological systems.

Considering that most people cannot fully grasp how the design of digital environments and digital choice architecture affects online consumers, it is unrealistic for policies and laws to expect us to be “reasonable” users who are always vigilant, alert, and able to read and understand lengthy, often unreadable terms and conditions.

This mismatch highlights a systemic failure – a deficiency or inefficiency in current policies and laws meant to protect consumers.

Fragmented and outdated competition and consumer protection laws, weak data protection, and the lack of coordination among data protection, competition, consumer protection, and multimedia communications regulations all contribute to the systemic vulnerability of online consumers.

The conventional distinction between private and public law is inadequate in digital markets, as consumer protection cannot rely solely on contract-based private remedies, while regulatory enforcement primarily operates within public law framework.

In the complex digital environment, sector-specific approaches, jurisdictional boundaries, and the fragmented enforcement or absence of laws fail to offer effective protection, thereby contributing to systemic vulnerability.

Reliance on public enforcement to protect consumers

The reliance on public enforcement to protect consumers is even more pressing now, given the growing complexity of digital markets and the limitations of private remedies.

Since gathering evidence online is difficult, time-consuming and costly, it is unreasonable to expect individual consumers to bear the burden of combating these challenges alone. The lack of effective public and coordinated enforcement, combined with consumers’ limited access to online evidence, actively perpetuates systemic vulnerabilities in digital markets.

The increase in online scams, fraud, and unfair commercial practices that cause significant financial harm to consumers is often left for consumers to defend on their own.

Access to justice for consumers depends not only on the existence of the mechanisms but also on the effectiveness of the remedies they provide.

In digital markets, where evidence is often hard to obtain and harms can be widespread, formal mechanisms alone are insufficient unless they deliver meaningful and enforceable redress.

Providing more information, educating consumers, or raising awareness addresses only surface-level concerns and does little to mitigate the structural vulnerabilities inherent in digital environments.

Rethinking approach to consumer protection law

It is essential to rethink our approach to consumer protection law and its enforcement, particularly the role of public enforcement.

Vulnerability should no longer be seen as something that affects only “some consumers”, but as an inherent aspect of everyone’s experience online.

Consumer protection should move beyond placing the burden on individuals to defend themselves with inadequate tools and instead prioritise the regulation of unfair conduct and practices of businesses, supported by skilled enforcers employing sophisticated enforcement technologies and methodologies to enhance regulatory effectiveness.

Implementing proactive harm prevention measures and robust market surveillance is essential to ensure effective consumer protection.

-- BERNAMA

Dr Ong Tze Chin is a senior lecturer at the Faculty of Law, Universiti Malaya.