By Confidence Mbang, Esq.
Introduction
The Federal Competition and Consumer Protection Act (hereafter the Act) represents a landmark consolidation of Nigeria’s competition and consumer protection law, establishing the Federal Competition and Consumer Protection Commission (hereafter FCCPC) as the apex regulatory authority in that space. At the time of its enactment, it was progressive, comprehensive, and fit for purpose. However, it is no longer fit for purpose. The transformation of the digital economy has fundamentally altered the nature of consumer harm, structure of markets, and the identity of the actors who cause damages to ordinary Nigerians.
The Act was drafted for a world of tangible goods, physical service delivery, and human decision-making. Today, we leave in a world of algorithmic pricing, AI-generated content, data-driven manipulation, platform market dominance, and automated denial of financial services. The statute has not kept pace, and the consequences for Nigerian consumers are serious and growing. Accordingly, the following issues make the Act expedient for amendment:
- Failure to Address AI-Generated Consumer Harm: This is the most urgent gap in the current framework: AI systems now make or influence decisions that directly affect Nigerian consumers every day. From credit scoring by fintech platforms, to insurance underwriting, employment screening, content moderation, and targeted advertising, each of these AI-driven processes carries the potential for consumer harm. Issues of concern revolves around discriminatory outcomes, opaque denials, manipulative design, and systemic exclusion of vulnerable groups. The Act’s prohibition on “unfair,” “misleading,” and “deceptive” conduct under Part X was drafted with human actors and conventional commercial practices in mind. It failed to contemplate algorithmic discrimination, where an AI system produces systematically biased outcomes against consumers on the basis of proxies for protected characteristics; automated denial of services, where a consumer is refused credit, insurance, or access to a platform by a machine learning model with no human review and no explanation.
AI-generated deceptive content, including synthetic product reviews, deepfake endorsements, and chatbot-based mis-selling; or dark pattern design, where AI optimises user interfaces to manipulate consumer consent and override genuine choice are critical issues of concern. An amendment must introduce express provisions defining these as actionable consumer harms, establishing the commissions jurisdiction over AI-deploying entities, and creating clear standards of conduct for businesses that use automated systems in consumer-facing contexts.
- Lack of Algorithmic Explanation: Under the Act, a consumer who is denied a loan by a fintech algorithm, rejected from an insurance product by an automated underwriting system, or charged a discriminatory price by a dynamic pricing engine has no statutory right to know why nor the basis. There is no provision requiring the entity responsible for the AI system to explain the decision, disclose the factors that drove it, or offer a meaningful avenue for challenge. This is not merely a data protection problem for the Nigeria Data Protection Commission (NDPC) to solve. It is a consumer protection problem. The right to an explanation of a commercially consequential automated decision is a consumer right ought to be governed by the Act.
An amendment should introduce a standalone right to algorithmic explanation enforceable by the individual consumer directly, not merely through the commissions administrative proceedings, but adapted from Article 22 of the General Data Protection Regulation (GDPR) and the EU AI Act’s transparency obligations for high-risk AI systems.
- The Product Liability Regime Does Not Cover AI Systems or Software: Obviously, Part XVI of the Act, which governs product liability, is built around the concept of a defective tangible product. It contemplates manufacturing defects, design defects, and failure to warn all in the context of physical goods. AI systems are not physical goods. They are complex, adaptive software products whose “defects” may be statistical rather than mechanical. The European Union has addressed this directly through the revised Product Liability Directive (rPLD) 2024, which expressly extends the definition of “product” to include software and AI systems, and introduces a rebuttable presumption of defect and causation in cases where the complexity of the product makes proof unreasonably difficult for the claimant.
Nigeria has made no equivalent strategy. The result is that a consumer harmed by a defective AI system has no product liability claim under the Act. They are left to pursue a tortious negligence claim under common law, with all the attendant difficulties of proving duty, breach, and causation against an opaque algorithmic system. The amendment must extend the definition of “product” to encompass software, AI systems, and digital services, and must introduce a modified, consumer-accessible liability standard for AI-generated product harm.
- The FCCPA-NDPA Jurisdictional Overlap must be resolved: Consumer harm increasingly presents simultaneously as a data protection violation and a consumer protection violation. A data breach that exposes consumers’ financial information is both a failure of data security under the Nigeria Data Protection Act (NDPA) 2023 and an unfair trade practice under the Act. An AI system that uses personal data to manipulate consumer choices is simultaneously a data processing violation and a deceptive commercial practice.
The current framework gives both the NDPC and the FCCPC plausible jurisdiction over such cases, without any statutory mechanism for resolving the overlap. The result is regulatory uncertainty for businesses, duplicative compliance burdens, and – most damagingly – forum shopping opportunities for respondents who can exploit the jurisdictional ambiguity to delay accountability.
An amendment to the Act should introduce a formal jurisdictional demarcation and coordination mechanism between the FCCPC and the NDPC: a statutory duty to consult, a lead authority designation framework for overlapping cases, and a binding MOU requirement. This mirrors the approach adopted between the Finance Conduct Authority (FCA) and Information Commissioner’s Office (ICO) in the United Kingdom for financial data protection matters.
- Inadequacy of the Sanctions Regime for the Digital Economy: The penalties under the Act, while significant at the time of enactment, are not calibrated to the scale of digital economy actors. A fine that represents a meaningful deterrent to a domestic SME is entirely inconsequential to a multinational platform generating billions of naira in Nigerian revenue annually. An amendment should introduce a turnover-based penalty regime – a percentage of the respondent’s annual turnover in Nigeria – for serious consumer protection and competition violations, particularly those involving AI systems, data exploitation, or platform market abuse. This is the model adopted by the GDPR, the EU AI Act, and the Digital Markets Act, and it is the only penalty structure that creates genuine deterrence for large digital economy actors.
CONCLUSION
The Act was a generational achievement in Nigerian consumer and competition law. Amending it is not a critique of its architects, rather, it is an acknowledgment that the digital economy has moved faster than any legislature could have anticipated in 2018. Nigeria faces a choice. It can allow the Act to age into irrelevance while AI systems, platform gatekeepers, and algorithmic markets reshape the consumer landscape without adequate legal accountability.
It can undertake a comprehensive, forward-looking amendment – informed by comparative best practice from the EU, UK, and beyond, but adapted to Nigeria’s specific legal, institutional, and socio-economic context – that positions the Act as a credible, enforceable framework for the digital age. The case for amendment is not merely academic. It is a matter of practical justice for the Nigerian consumer.
The post Why The Federal Competition And Consumer Protection Act 2018 Should Be Amended appeared first on TheNigeriaLawyer.
