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Zerodha CEO and co-founder Nithin Kamath has raised serious concerns about the widespread use of manipulative design tactics known as “dark patterns” in financial services applications. Kamath, in a strongly worded post on X, criticised how such practices often reflect the industry's prioritisation of profits over customer interest.

Kamath noted that building a financial services firm comes with inherent ethical challenges. "Incentives are often skewed toward doing what’s good for the business and not for the customer. It’s very hard to consistently put customers first," he wrote. He explained that this misalignment is a driving force behind the prevalence of dark patterns in finance apps, arguably more than in any other sector.

What Are Dark Patterns?

According to Kamath, dark patterns refer to “design tricks used in apps and websites to make you do things that are not in your best interest.” These could include manipulative notifications, flashy gamification features, or interfaces that obscure the true costs of products and services.

He also cited misleading tactics such as casino-style elements, unclear terms, and the promotion of unsuitable financial products. "Many platforms are, in some ways, incentivised to work against their own users," Kamath added, quoting Charlie Munger: “Show me the incentives, and I'll show you the outcome.”

Contrasting industry norms, Kamath said Zerodha has refrained from using such tactics since its founding. “One reason Zerodha users trust us with their money is that we’ve avoided these practices from day one. Doing what’s right for our customers has always been at the heart of our philosophy,” he affirmed.

Widespread Issue Across Indian Apps

Kamath’s concerns are supported by recent findings. A 2024 study by the Advertising Standards Council of India (ASCI) found that 52 of the top 53 downloaded Indian apps employed at least one form of deceptive interface, including hidden costs, misleading timers, or pre-checked consent boxes.

An extensive consumer survey by LocalCircles echoed these concerns. Reviewing 228 digital platforms across sectors like edtech, travel, e-commerce, and digital banking, the study revealed forced actions, drip pricing, and bait-and-switch tactics were common across more than half the platforms surveyed.