The Competition and Markets Authority (CMA) is investigating companies using technology on sites for sale. Shoppers could be “manipulated” into purchasing specific goods, it said, as search results promote several brands. On these pages, users may also be shown false advertisements, implying that products are in short supply.
Kate Brand, its data science director, added: “Algorithms play an important role online, but can potentially do a tremendous amount of harm to consumers and businesses if not used responsibly.”
“The evaluation of this harm is the first step towards ensuring that customers are protected and complements our broader work in digital markets to foster greater competition and online innovation.”
“The regulator warned that the effect of algorithms can be tough for shoppers to detect, adding that websites could use “nudges” including the location of a “buy” button or generate “personalised pricing. The CMA added that online sites may also have misleading messages that indicate a product is in short supply.
Another concern that it needs to scrutinize is how businesses can use algorithms to manipulate ratings for online evaluation.
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However, by recommending goods or services in which customers are more likely to be involved, the CMA has acknowledged that this technology may also offer benefits.
It now requires feedback from scholars and industry experts to support the investigation.
“The majority of algorithms used online by private firms are currently subject to little or no regulatory oversight, and the study concludes that regulators require more monitoring and action,” the CMA said in a statement.
Rocio Concha, director of policy and advocacy at consumer group Which?, said “pressure-selling tactics” or the use of fake reviews can be harmful to customers.
“Algorithms can help consumers find suitable products and services as well as good deals, but can also be used to track and monitor behaviours in ways they are unaware of, leading to them being manipulated or misled – either accidentally or by design,” she added.