In the rapidly evolving landscape of retail, augmented reality (AR) technology has emerged as a powerful tool for influencing consumer purchasing decisions.

However, as retailers harness the potential of AR to enhance their marketing strategies, they must navigate a complex web of legal challenges and considerations.

In an exclusive interview with UK law company TLT, Perran Jervis, partner and head of retail, Duncan Reed, partner in TLT’s commercial team, and Emma Erskine-Fox, managing associate in TLT’s data, privacy, and cybersecurity team, shed light on key issues surrounding consumer transparency, data privacy, deceptive marketing practices, and the future regulatory framework for AR in retail.

Consumer transparency and disclosure

Ensuring clear disclosure about the use of AR technology in influencing customer purchases is paramount for retailers. According to TLT, transparency is key to maintaining consumer trust and avoiding legal repercussions.

“Retailers should consider being as transparent as possible about the use of AR technology when employing it for advertising purposes,” said TLT.

The business emphasised retailers should consider incorporating disclaimers such as "AR technology has been used in the production of the image" to provide consumers with upfront information about the use of AR manipulation.

“The use of AR becomes problematic if it is used in deceptive marketing practices, misleading a customer into thinking that the product is real.”

Failure to explicitly mention the use of AR manipulation could have legal ramifications under the Consumer Protection from Unfair Trading regulations.

TLT highlights a case investigated by the Advertising Standards Authority (ASA) in 2021, where filters were used to alter the appearance of individuals in ads for tanning products.

The ASA deemed these ads misleading, emphasising the importance of transparency in AR marketing practices to avoid deceiving consumers.

“Openness is the safer course. Authenticity is very important to most consumers and if they feel that they have been deceived, even in a minor or indirect way, they will react angrily and not only reject a brand but share their experience which can be very damaging,” TLT asserted.

Data privacy and security

With AR potentially collecting user data, retailers must address legal considerations regarding data collection, storage, and usage.

TLT emphasises that the UK's General Data Protection Regulation applies to the collection and processing of user data for AR, necessitating compliance with stringent data protection rules.

"Processing must also be “fair”, so retailers must ensure they only use the data in ways that users would reasonably expect, and the impact on individuals and intrusion into their privacy must be justified and proportionate."

According to TLT, retailers employing AR features must conduct thorough due diligence on vendors and implement “robust contracts” to ensure the appropriate protection of user data.

Data protection impact assessments and clear mapping of data collection processes are recommended to mitigate privacy risks associated with AR implementation.

The law firm emphasises: “Whilst the potential of AR technology in the retail space is no doubt exciting, retailers should take a 'needs-led', rather than a “tech-led” approach; identifying the need for a particular solution first, before jumping in at the deep end.”

Deceptive marketing practices

Drawing the line between creative product visualisation and deceptive manipulation through AR filters poses a significant challenge for retailers.

TLT emphasises the importance of maintaining realism in AR experiences to avoid misleading portrayals. Retailers risk facing Trading Standards investigations, criminal prosecutions, and civil claims from consumers if AR experiences are found to be deceptive.

“If someone else (a competitor) takes offence, then the issue could be taken up with ASA, which could have a significant impact on the brand and profile of a business, leading to catastrophic results. It could also lead to civil claims from consumers - or at worst a class action from consumers.”

Future of AR regulation

As AR-driven marketing continues to evolve, existing consumer protection laws must adapt to address emerging legal challenges.

TLT underscores the need for clarity on what constitutes misleading AR content and the development of better guidelines for retailers.

“Whilst the regulation and the law already exist, what is needed is further clarity around what is misleading and better guidelines on how retailers can use AR properly.

"Without proper guidance, retailers using AR technology risk bringing up trust issues for their brand and finding their customer base reducing in size considerably, which could have a detrimental effect to the business.”

Anticipating further legislation addressing digital issues for consumers, TLT emphasises the importance of staying informed about regulatory updates in the AR space.

Best practices for retailers

To mitigate the legal risks associated with AR implementation, retailers are advised to prioritise transparency and disclosure.

TLT suggests incorporating disclaimers on manipulated images and adopting practices similar to those used by social media influencers to indicate sponsored content.

By being transparent about the use of AR technology and offering access to actual images upon request, TLT states retailers can minimise the potential for legal disputes and maintain consumer trust.

As retailers embrace AR technology to enhance the customer experience, they must navigate a complex legal landscape.

By prioritising transparency, data privacy, and adherence to regulatory guidelines, retailers can leverage AR effectively in an increasingly digital marketplace.