They misused me! Digital literacy’s dual role in AI marketing manipulation and unethical young consumer behavior

Purpose Artificial intelligence (AI)-driven marketing has transformed the landscape of consumer interactions, but it also raises ethical concerns regarding perceived manipulation and subsequent unethical young consumer behavior. This study aims to investigate the direct and indirect effects of AI-driven marketing on unethical young consumer behavior, with digital literacy as a moderating variable. The authors introduce and conceptualize a digital literacy construct that influences how young consumers perceive and react to manipulative AI-driven marketing tactics. Design/methodology/approach Using the Elaboration Likelihood Model (ELM) and the Persuasion Knowledge Model (PKM), this research explores how digital literacy influences the reception of AI-driven marketing and moderates the effects of perceived manipulative tactics. This study adopts a three-wave, time-lagged survey method among young consumers in urban Pakistan, integrating measures of AI-driven marketing techniques, perceived manipulation, digital literacy and unethical consumer behavior. Findings The results reveal that perceived manipulation mediates the relationship between AI-driven marketing and unethical young consumer behavior. Digital literacy significantly moderates this effect, indicating that higher digital literacy levels can mitigate the negative impacts of perceived manipulation. Conversely, lower digital literacy amplifies the negative impacts of perceived manipulation. Practical implications The findings underscore the need for marketers to foster transparency and ethical practices in AI-driven strategies. Enhancing consumer digital literacy can serve as a protective factor against unethical marketing practices. Originality/value This study contributes to the understanding of digital literacy’s protective role against unethical AI-driven marketing practices. It extends existing models of persuasion and consumer response by demonstrating how digital literacy reshapes traditional consumer response frameworks in the context of AI-driven environments.