RBI names 11 'dark patterns' banks must avoid
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- RBI issued new directions this week on how banks must advertise, market, and sell financial products, identifying 11 'dark patterns' in an annexure including countdown timers, pre-ticked boxes, and buried cancellation options.
- The directive formally uses the term 'confirm shaming' — a signal that the manipulation tactic has become visible enough in practice to warrant naming in regulation.
- RBI bars bank staff from accepting incentives from third-party product providers whose offerings they sell, and bans mandatory bundling of one product with another or linking a sanctioned loan to an unrelated purchase.
- For the first time, the rules require banks to assess product suitability before selling and establish a standing mechanism for refunds and compensation in cases of mis-selling.
- Dhirendra Kumar, founder of Value Research, argues the rules confirm that banks have operated as 'commission-driven sales shops' steering customers toward higher-paying products — the same pattern he has long documented in the Indian insurance industry.
- Kumar cautions that the insurance regulator and the markets regulator have both issued similar anti-mis-selling directives, yet the practice 'has persisted largely unchanged' because commissions remain the system's engine.
Why it matters: Each new RBI prohibition can be read as confirmation of an existing abuse already in practice — from hidden insurance folded into loans to sales steered by third-party commissions. The rules institutionalize refund mechanisms for mis-selling, but the author warns similar past efforts by insurance and markets regulators have failed because commissions still drive bank behavior.
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