(The Center Square) – Consumers have grown accustomed to a hyper-individualized shopping landscape in which personalized advertisements and custom coupons steer them toward purchases algorithms predict they will enjoy.
What they may not realize, however, is that the use of personal data has led to the advent of surveillance pricing, a strategy in which retailers vary the price of a product based on the customer buying it.
Rep. Danilo Burgos, D-Philadelphia, has introduced a bill that would ban the practice in Pennsylvania, both for brick and mortar and online retailers.
“Our economy and our ability to budget for our household depends on predictability, and we see a disturbing trend where predictability and transparency are in jeopardy if surveillance pricing remains unchecked,” wrote Burgos in support of the bill.
The memo warns that companies accessing data online could use your shopping history or information as sensitive as the amount of money remaining in your bank account to determine the price of an item.
In January of this year, the Federal Trade Commission issued a report saying that surveillance pricing can incorporate data gathered from phones and other personal devices like precise GPS location, open shopping carts, and browsing history.
“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,” said former FTC Chair Lina M. Khan.
Current FTC Commissioner, Andrew N. Ferguson, however, wrote a dissenting opinion about the report. He claimed that the release of information was prematurely issued by outgoing Democratic leadership and required further investigation.
“As the research summaries make clear, ‘there is much more work to do,’ particularly with respect to identifying ‘more definitive impacts to prices or market participants’—the motivating principle underlying the study,” wrote Ferguson. “The Commission should allow staff to do its work and issue a final, fact-based report, rather than rush to meet a nakedly political deadline to present something, anything, to the public.”
Businesses aren’t waiting for legislation to catch up to technology. Some of the nation’s biggest retail chains, including Wal-Mart, Kohl’s, and grocery giant Kroger, already employ digital displays which allow for dynamic pricing, meaning costs can change in real time depending on a number of different factors.
Most retailers insist that this dynamic pricing is not an indicator that they will move to surge pricing, a different tactic which involves increasing the price of an item in times of higher demand. While this is a common economic maxim, new technology allows it to be put into practice faster than ever before.
Combined with increasingly prevalent facial recognition software, many fear that custom pricing will lead to price gouging and other unfair practices, with individuals paying different prices from their neighbors for the same item at the same time. A person’s internet data can be paired with physical characteristics to create a customer profile without their consent.
