Shocking Penalty! Zepto Caught Using 'Dark Patterns' – Consumer Watchdog Slaps ₹7 Lakh Fine!

Zepto Fined ₹7 Lakh for Deceptive 'Dark Patterns'

The Central Consumer Protection Authority (CCPA) has imposed a penalty of ₹700,000 on Zepto Marketplace Pvt Ltd for violating consumer protection laws through the use of 'dark patterns'. The quick commerce platform was found guilty of misleading price disclosures, specifically employing drip pricing and basket sneaking tactics that ultimately charged consumers more than initially advertised.

CCPA's Action on Zepto

• The CCPA's final order, reviewed by Mint, found Zepto's practices to be in breach of multiple provisions of the Consumer Protection Act, 2019.
• Drip pricing involves advertising a low price upfront but inflating the final cost with undisclosed mandatory fees like handling charges and membership fees during checkout.
• Basket sneaking occurs when services or items are added to a consumer's cart without their explicit knowledge or consent.
• The penalty follows notices sent to 11 e-commerce companies earlier this year, warning them against dark patterns.

Understanding Dark Patterns

• Dark patterns are deceptive online designs intended to trick users into unwanted actions for commercial gain.
• They subvert consumer autonomy, decision-making, and choice by using user interface or user experience interactions.
• The government has identified 13 types of dark patterns, including false urgency, subscription traps, disguised advertisements, and misleading pricing strategies.

Key Violations Noted

• The CCPA conducted a reality test on January 2, 2025, observing that an item advertised at ₹170 was priced at ₹177.44 in the cart due to undisclosed handling charges and Zepto Pass membership fees.
• Zepto Pass and other add-ons were found to be pre-selected in the cart, requiring manual deselection, which constitutes basket sneaking.
• The authority also noted interface interference, where the design nudged users towards costlier options or discounts.

Zepto's Defense and Regulatory Response

• Zepto argued that all fees were disclosed in its terms of use and that additional amounts were levied by individual sellers, not retained by Zepto.
• The company also stated that it had modified its UI to improve clarity and remove pre-selected features.
• However, the CCPA stated that these changes were made post-regulatory intervention and did not absolve Zepto of past violations.
• The CCPA emphasized that price disclosures must be upfront as per guidelines, and mandatory charges should not appear late in the purchase flow.

Broader Market Context

• This action against Zepto is the second after Rapido was fined, indicating a strict stance by regulators.
• India's online retail market is projected to grow from $75 billion in 2024 to $260 billion by 2030.
• Quick commerce is a rapidly expanding segment within this market, growing at 70-80% annually.

Impact

• This ruling reinforces the CCPA's authority and sets a precedent for other e-commerce platforms regarding fair trade practices.
• It will likely lead to greater transparency and caution from companies operating in the online retail and quick commerce spaces to avoid similar penalties.
• Consumers may see clearer pricing and fewer hidden charges, leading to a better online shopping experience.

Impact Rating: 8/10

Difficult Terms Explained

• Dark Patterns: Deceptive online design elements that trick users into taking actions they might not otherwise take, often for profit.
• Drip Pricing: A pricing strategy where an initial price is advertised, but additional mandatory fees are added as the customer progresses through the purchase process, increasing the final cost.
• Basket Sneaking: Automatically adding optional items or services to a customer's shopping cart without their explicit consent, requiring them to manually remove them.
• Suo Motu Cognizance: The power of a court or authority to take notice of a matter on its own initiative, without a formal complaint being filed.
• Interface Interference: Designing a user interface in a way that manipulates users into making certain choices, often by highlighting preferred options or obscuring others.
• Consumer Protection Act, 2019: An Indian law enacted to protect the interests of consumers against unfair trade practices and defective goods/services.