AI, E-Commerce Test Limits of the Reasonable Consumer Standard

"The rise of e-commerce and data-driven digital advertising is chipping away at the reasonable consumer standard, a foundational legal concept historically used to determine whether business practices are deceptive, consumer law professionals warn. Courts determine whether a marketing practice was deceptive by assessing whether hypothetical reasonable consumers would have been misled by a particular statement. But the growth of digital advertising over the last 30 years has fragmented audiences as consumers' online experiences become increasingly personalized."

"When advertising on television and radio was the focus, there was a shared information environment and consumers were exposed to similar messages, said Ceren Canal Aruoba, a managing director at consulting firm Berkeley Research Group. But now "we live in a world of very micro-targeted marketing" where "we all get different types of information" through our individualized social media feeds, she said. "This raises the threshold in many ways in terms of 'reasonable' compared to whom and in what context.""

E-commerce and personalized digital advertising fragment audiences and challenge the reasonable consumer standard used to assess deceptive marketing. Courts traditionally evaluate deception by asking whether a hypothetical reasonable consumer would be misled by a marketing statement. Rapid adoption of AI advertising tools and narrow targeting enable firms to present varied messages to different microsegments, making it harder for individual consumers to prove they were misled. Personalized social media feeds replace shared information environments, increasing variability in consumer exposure. Courts will likely need empirical evidence such as consumer surveys to assess deception, but adapting to segmentation and new technologies will require time.

Read at Bloomberglaw