Imagine you are in line to purchase a new laptop computer at one of the big box retailers. You were pleased to find the laptop you wanted for only $750. However, when you look to your right you see another customer buying the exact same computer, but their price tag says $600. And to your left another person is giving the cashier $550 for the same computer. While this situation would be very unusual in a brick-and-mortar store, it happens all too often online, because of surveillance pricing.
Exactly what is surveillance pricing? It refers to the practice some companies use to set different prices for specific consumers for the same goods or services to generate greater profits. These companies collect or obtain individualized personal information about their actual or potential customers and use a variety of techniques to set their variable pricing.
Companies are, in effect. “weaponizing [consumers] own data against them,” Consumer Watchdog explained and offered these examples:
Orbitz learned that Mac users spend more money to stay at hotels and charged them more than non-Mac users.
Staples.com charged people more for the same stapler if they knew a person had fewer options, such as being near a competitor.
Target charged people more when they were in a Target parking lot versus when they were in another location. Target determined people who are already in their parking lot were willing to pay more. For example, a TV on the Target app was priced at $499.99, but once the person entered the company’s parking lot the price went up $100, to $599.99. Prices also spiked for an Apple Watch, a Shark vacuum, a child car seat, and a Dyson vacuum once people entered the store. The corporation was ultimately forced to pay $5 million in civil penalties and stop its geofence price switching.
Over at Amazon, prices change over 2.5 million times a day, meaning the average cost of a product changes about every 10 minutes.”
The Federal Trade Commission launched an investigation into surveillance pricing earlier this year. The FTC Chair at the time, Lina M. Khan, reported that “initial staff findings show that retailers frequently use people’s personal information to set targeted, tailored prices for goods and services—from a person's location and demographics, down to their mouse movements on a webpage. The FTC,” she said, “should continue to investigate surveillance pricing practices because Americans deserve to know how their private data is being used to set the prices they pay and whether firms are charging different people different prices for the same good or service.”
Consumer advocates are calling for regulation of this pricing practice, but it is unknown if that will happen. Economics and climate educator, and founder of Better Future Media Michael Mezzatesta argues that “individuals shouldn’t have to outsmart an opaque system just to get fair treatment and transparent pricing. This is where regulation needs to step in."
There are “proactive steps [you] can take to safeguard your personal information and ensure fair pricing,” investopedia.com suggests.
- “Use a VPN: A virtual private network, or VPN, masks your location and browsing activity to prevent targeted pricing. There are free VPNs while a subscription service costs about $10 per month.3
- Clear Browser Cookies Regularly: Clearing the cookies from your device regularly limits the ability to track your online behavior because the data has been deleted.
- Browse in Incognito Mode: Your browsing history and personal data aren't saved when browsing in Incognito mode.
- Compare Prices Across Devices: Check prices on different devices to spot potential price differences.”
