The Missing Remedy: Restoration Damages for Dark Patterns and Other Pre-contractual Manipulations

Pre-contractual manipulations – whether through deception, coercive pressure, or digital ‘dark patterns’—undermine both the efficiency and fairness of contractual bargaining. Although the law generally recognizes these tactics as wrongful, the remedies it provides often prove inadequate. In American law, the harm from manipulation is traditionally measured through the lens of the executed transaction. Thus, prevailing measures—such as out-of-pocket or benefit-of-the-bargain damages—either compensate victims for the losses they sustained in that transaction or enforce their right to its expected benefits. Other legal systems largely follow a similar approach. Yet, this focus on the executed transaction consistently overlooks the contract that could have been struck absent the manipulation – the superior bargain the victim was prevented from making. In many instances, the real harm lies not in the transaction that was formed, but in the better deal that was lost.

This paper introduces restoration damages as the missing remedy in the law’s remedial framework. These damages seek to restore the victim to the position they would have occupied had the manipulation not taken place. Rather than focusing on the flawed contract or the imagined truth of the misrepresentation, restoration directs attention to a counterfactual transaction—the deal the parties would have reached absent the manipulation. The goal is to compensate victims for the profits they would have secured in an untainted environment.

To illustrate the relationship between restoration damages and existing remedies, consider the following example. An online retailer advertises a promotional sale, claiming that a product regularly priced at $200 is offered at a 50% discount for a limited time. In reality, however, the product’s regular price has always been $100. Assume further that absent the manipulation, buyers would have been willing to pay only $75 for the product—a price the seller would have accepted to clear inventory. 

In cases such as this, current remedies offer no recourse to buyers. Buyers cannot recover out-of-pocket damages, as there is no discrepancy between the agreed price and the product’s market value. Nor can they recover benefit-of-the-bargain damages, as there is no difference between what was promised and what was delivered. Hence, according to prevailing standards, there appears to be no compensable loss. This conclusion, however, fails to recognize a critical aspect of the manipulation: by misleading consumers into perceiving the deal as more appealing than it truly is, the deception artificially boosts demand, driving up both price and sales volume. This manipulation of demand is, in fact, the very motive behind the seller’s deception. In such circumstances, consumers should be entitled to restoration damages, reflecting the benefit of the hypothetical bargain that would have been struck had the seller refrained from manipulation. In the example above, we accordingly propose that buyers be entitled to $25 in restoration damages, placing them in the same monetary position they would have occupied had the manipulation not occurred. 

This form of harm, though largely neglected in legal doctrine, arises frequently in contractual interactions. It is particularly evident in transactions distorted by tactics such as deceptive promotion sales (where ordinary prices are presented as discounts), fictitious scarcity warnings (such as false low stock alerts), or subtly misleading assurances about exclusivity. These strategies are effective because they artificially inflate demand and drive up market prices. Prevailing remedies offer no relief as consumers receive the product they agreed to purchase at the listed price. Yet they endure a tangible loss – not because they were denied the promised good, but because they were deprived of the superior terms that honest negotiation would have yielded.

In many instances, restoration damages will result in higher awards than traditional measures. We demonstrate this through a series of comparisons between restoration and prevailing measures under U.S. tort and contract law. Restoration may exceed expectation or benefit-of-the-bargain damages when, in a manipulation-free environment, the victim would have negotiated a lower price – yielding a greater net gain than under the actual contract. It may also surpass out-of-pocket damages, as restoration is not contingent on reliance and may result in a positive award even when the contract price is below market value.

To be sure, a remedy grounded in a hypothetical transaction presents evidentiary challenges. Determining the terms that would have prevailed absent manipulation is not always straightforward. Yet these challenges are neither unfamiliar nor insurmountable. Courts routinely engage in counterfactual reasoning in tort and contract law, such as when calculating expectation damages or determining causation. Tools like market benchmarks, proportional pricing, and expert models can often serve as reliable proxies for the terms of a fair negotiation. And in close cases, the burden should rest on the manipulating party to demonstrate that no deal would have been formed or that the reconstructed terms are implausible.

Restoration also rests on a strong normative foundation, supported by a range of theoretical perspectives. It advances efficient deterrence by compelling wrongdoers to internalize the full costs of their manipulative conduct. It enhances the distributional balance in consumer markets, where sophisticated sellers exploit asymmetries in information and cognitive vulnerabilities. It also resonates with non-instrumental theories of private law. From an autonomy-based perspective, restoration honors the terms the parties would have reached voluntarily, rather than those superficially expressed under the influence of manipulation. From a corrective justice standpoint, it embodies the principle of restitutio in integrum – restoring the injured party to the position they were rightfully entitled to occupy. 

This proposal carries particular urgency in the digital marketplace, where ‘dark patterns’ and sophisticated manipulations are increasingly pervasive and resistant to regulation. Traditional remedies struggle to account for the subtle yet significant economic harms these practices inflict. Restoration, by compensating for the true opportunity cost of manipulation, offers a principled and essential remedy. It ensures that the law neither condones nor incentivizes deception by default. 

Given the limitations of prevailing remedies and the distinctive nature of the harm caused by manipulation, the law’s understanding of precontractual injury warrants reconsideration. Shifting the focus to the terms that would have likely emerged in an honest negotiation may offer a more precise and normatively coherent foundation for compensation. Restoration damages seek to capture that counterfactual baseline.

A copy of the full paper can be found here.

Yuval Procaccia is an Associate Professor at the Harry Radzyner Law School at Reichman University. Eyal Zamir is the Augusto Levi Professor of Commercial Law at the Faculty of Law at the Hebrew University of Jerusalem.