RBI Bars Mis-selling by Banks, Trains Gun on Dark Patterns

The Reserve Bank of India has barred commercial banks and their direct selling agents from using dark patterns in customer interfaces, tightening rules on advertising, marketing and sale of financial products and services.

The directions will take effect from January 1, 2027, and apply to commercial banks, excluding small finance banks, payments banks, regional rural banks and local area banks. The RBI said the rules cover banks’ own products as well as third-party financial products and services.

The central bank defined dark patterns as deceptive user-interface or user-experience practices designed to mislead or trick users into doing something they did not intend to do, by impairing consumer autonomy, decision-making or choice.

Banks and their direct selling agents will have to subject user interfaces to user testing and periodic internal audit to identify unfair features, including dark patterns. They must also comply with the Central Consumer Protection Authority’s 2023 guidelines on dark patterns.

The RBI listed false urgency, basket sneaking, confirm shaming, forced action, subscription traps, interface interference, bait-and-switch tactics, drip pricing, disguised advertisements, nagging and trick wording as dark patterns relevant to banks.

The directions also widen the definition of mis-selling. Mis-selling will include sale of an unsuitable product, incomplete or misleading disclosure, sale without explicit consent, compulsory bundling and any other element defined by the relevant financial regulator as mis-selling.

Banks will have to obtain explicit consent before selling their own or third-party products. When consent is sought for more than one product on a single form, each product must be clearly listed and customers must be able to choose only the products or services they want.

The RBI said the default choice for consent must be “No” or “I do not agree”. Banks must also ensure that the consent process is designed so customers cannot grant consent without going through the applicable terms and conditions.

Banks cannot advertise or market third-party products as their own. Promotional materials must be clear and factual, disclose interest rates, fees and charges, and prominently display terms and conditions across points of sale, websites and mobile apps.

Banks must send promotional communication only to customers who have given explicit consent. The process for unsubscribing from promotional communication must be easy and simple.

Highlights

• RBI bars banks and direct selling agents from using dark patterns.
• Rules take effect from January 1, 2027.
• Directions apply to commercial banks, excluding small finance banks, payments banks, regional rural banks and local area banks.
• Banks must frame a policy for advertising, marketing and sale of their own and third-party products.
• Banks must maintain and display an updated list of direct selling agents and direct marketing agents on their websites.
• Sales agents and third-party product representatives inside bank premises must be distinguishable from bank employees.
• Banks must obtain explicit consent before selling any own or third-party product.
• Default consent choice must be “No” or “I do not agree”.
• Banks cannot make the purchase of one product conditional on another, unless a third-party product is needed as a risk mitigant and customers can choose the provider.
• Banks must seek customer feedback within 30 days of sale to ensure customers understood the product and its risks.
• If mis-selling is established, banks must refund the entire amount paid and compensate customers for losses as per their approved policy.
• Marketing calls and visits must normally be made only between 0900 IST and 1900 IST, unless the customer explicitly requests or authorises contact outside that period.