Consumer Watchdog report finds surveillance used to trigger price changes
of ConsumerAffairsConsumers may be unknowingly facing higher prices for the same products thanks to a controversial practice called surveillance pricing, according to a new report from Consumer Watchdog. The nonprofit warns that companies are increasingly using personal data, including shopping habits and even location, to charge consumers individualized prices, often without their knowledge or consent.
Surveillance pricing occurs in the e-commerce world, where businesses tailor prices to maximize profits based on what they know about consumers. It is not driven by traditional market forces like supply and demand but rather by assumptions about a persons willingness to pay. The practice allows businesses to exploit consumer data by adjusting prices based on location, browsing history, and other factors.
One example highlighted in the report involves the Target app, which charged consumers $100 more for a television depending on their proximity to a store. If a person was in the Target parking lot, the price would increase, suggesting the company assumed they were willing to pay more the closer they were to the store.
Similarly, Amazon changes its prices over 2.5 million times a day, meaning that the price of an item can fluctuate significantly in just a matter of hours.
Hotels & rides
Consumer Watchdog found several other examples of companies engaging in surveillance price gouging. For instance, Orbitz reportedly learned that Mac users tend to spend more on hotel stays and subsequently charged them more than non-Mac users.
Staples.com was found to adjust prices for items based on how many competitors a customer had nearby. Additionally, The Princeton Review allegedly charged customers in certain zip codes more based on demographic data.
Rideshare companies, like Uber, were also named in the report. Uber allegedly used data to charge higher fares based on the phones battery level, believing that people with lower battery life would be more inclined to pay a higher fare. Although Uber and Lyft have denied this practice, there are still concerns over the use of surveillance pricing in the rideshare industry.
Consumer Watchdog also highlighted that poorer people are often charged more, particularly for services like broadband internet, food, and other products. A study of broadband prices showed that low-income areas were subjected to the worst deals, while lower credit scores also led to higher prices across various industries.
Concerns grow
As more businesses adopt surveillance pricing strategies, concerns about fairness and transparency grow. Corporate consultants have advised companies that personalized pricing can improve profit margins, but Consumer Watchdog argues that this creates an unfair system where consumers pay based on what companies assume they can afford.
To address this issue, Consumer Watchdog has called for a legal framework to protect consumers from surveillance price gouging. The organization recommends businesses provide clear notice about how personal data is being used to determine prices, bar companies from adjusting prices based on personal data without notification, and introduce a penalty system for violations.
The report concludes that consumers deserve a right to standard pricing, where the price would be the same for all, regardless of personal data.
Without transparency, we dont know how far surveillance pricing goes, said Justin Kloczko, a privacy advocate for Consumer Watchdog. The report urges lawmakers to take action and introduce laws that protect consumers from these hidden pricing practices.
Photo Credit: Consumer Affairs News Department Images
Posted: 2025-02-04 22:44:22
