Companies could be using your data to charge you higher prices than other shoppers when you’re shopping online, according to a warning from the Federal Trade Commission.
“This is creepy and invasive, and ultimately is not for our own good,” says Dr. Alan Mislove, Associate Dean for Academic Affairs at Northeastern’s Khoury College of Computer Science.
It’s called “surveillance pricing” and means two different shoppers could be offered different prices for the exact same item, just because of who they are, where they live, or their different shopping habits.
Unlike in a brick-and-mortar store, shoppers often have no idea if the price they’re offered is the same as someone else.
The practice starts with data collection.
“Data is collected about us almost constantly,” said Sara Geoghegan, Senior Counsel with the Electronic Privacy Information Center.
Geoghegan warns that data can be collected by one company, but then shared with others, including advertisers and other third parties.
“We might expect some of it to be used for the functionality of whatever we’re doing online,” she said. “But we don’t expect that this is going to be used downstream in ways we can’t even predict.”
Ways like charging you more money on an item online. The FTC warns companies can use your data to determine how much you might be willing to pay for a product, compared to another shopper.
“There’s a whole ecosystem of companies who collect data on you for the purpose of marketing and potentially surveillance pricing,” Mislove said. “You as an individual have very little ability to understand what data is being collected.”
That data can be as simple as your IP address, to things as complex as whether you may have children or own a home. Experts say companies are also analyzing your shopping behaviors, like whether you’re an impulse shopper or someone who takes time to research the best deal.
All of these data points are used to determine your willingness to pay.
“Everything is sort of stacked against the consumer,” Mislove said.
KIRO 7 Investigates spent months working with dozens of journalists across the country to try and catch the practice on camera.
We built a team of dozens of shoppers with very different shopping habits to build a diverse sample. The team included six of us at KIRO 7.
“I definitely get a lot of new mom ads right now,” said Deedee Sun, morning anchor at KIRO 7.
“I barely shop online,” said KIRO 7 Executive Producer Dan Herda.
“I don’t even have an account on any of these websites,” said KIRO 7 Managing Editor Rick Boone.
We each checked prices on six products, three times a day, at some of the most popular retail stores in the country.
While most of our prices stayed the same, we did catch several differences that were difficult to explain.
In one case, in Atlanta, a Lowe’s Grill shot up $70 when the zip code was changed to one 12 miles away.
In another example, two of our price checkers saw prices jump on a Home Depot pressure washer when their locations changed to Hawaii and Guam respectively. They had not touched their location settings, and aren’t sure why the change happened.
“The price increase was significant,” Herda said, whose price was affected.
When prices change online, experts say it can be hard to decipher exactly why.
“There’s many potential explanations,” Mislove said.
One difference we could explain is price changes at online marketplaces like Amazon and Walmart, where third-party sellers have the ability to set their own prices.
Different sellers meant some of our checkers were offered one Walmart TV for just under $900, while others were offered the same product for over $1,000.
An option was offered to explore other sellers.
Not surveillance pricing, but notable.
Mislove also suspects that companies could be utilizing surveillance pricing practices indirectly, by offering some customers discounts over others.
Overall, it’s the lack of transparency that experts say we should be worried about.
“Getting insights into this ecosystem is very difficult,” Mislove said. “A lot of it happens behind the scenes.
KIRO 7 Investigates contacted 14 major retailers and service providers directly to ask them if they used surveillance pricing.
Target, Walmart, and Uber told us explicitly: no.
Home Depot told us they try to keep prices consistent, but said there may be differences based on a customer’s selected local store.
Amazon told us they let independent sellers set their own prices.
Others, including Lowe’s, Best Buy, Kohl’s, Chewy, United Airlines, Alaska Airlines, Delta Airlines, American Airlines, and Lyft, did not respond to multiple attempts to reach them.
So, what can you do to protect yourself?
You could try shopping for the same item on a different device, using a private browser, or signing in and out of your account.
Experts say it could work to your advantage — but it could also work against it.
Instead, they advise the solution has to start at the beginning: with data.
“The main part to limit surveillance pricing is to limit the collection and use and processing of personal information,” Geoghegan said.
It’s not easy to do in a world where companies collect your data all around you.
“We really do need a much more systemic solution that limits the collection and processing of this personal information to best protect us,” she said. “I don’t think it’s reasonable to ask people to just not engage with the internet or to not shop online.”
Some states are trying to get ahead of it. Lawmakers in California are currently debating a bill that would ban surveillance pricing altogether.
You can read the bill here.
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