Automated and Algorithmic Decision Making, Data Driven Inferencing and Consumer Protection

Technology is changing the nature of consumer transactions. Goods and services are increasingly bought and sold online, impacting the nature of interactions and relationships between consumers and manufacturers of goods and services. Businesses are inundated with and generating large amounts of data each day. Automated or algorithmic decision making (ADM) and data driven inferencing (DDI) are claimed to improve efficiency, personalise product and service provision, and streamline application, payments, and complaints processes.
Purported benefits include identifying and predicting trends and demand, enabling agile decisions about price, product development and marketing, and allowing consumers to personalise and streamline choices or purchases but also pose challenges. Consumers may be completely unaware that their data is being mined to shape products and services offered to them. This invisibility, information asymmetry and opacity as to process or outcomes makes consumers vulnerable to exploitation by unfair practices, and presents new challenges
for consumer protection. While use of algorithms presents opportunities for consumer organisations to increase awareness of protections, others argue a ‘new consumer protection ecosystem’ is required. Australia’s Consumer Data Right is a first step, effective February 2020 and applying initially only to the banking sector, but broader protections are required.