It’s 5 a.m. and your toddler is crying. His forehead is hot. You remember, cursing yourself, that you are out of Tylenol. You squint at your phone and order more, selecting the quickest delivery option. Actually, that’s not soon enough. You pay the $2 fee so that it will arrive faster. Wait, where is the thermometer? Fine, order that too. You barely manage to complete the purchase before your kid throws up.
What if the retailer that sold you both of these items had raised their prices slightly, just for you, based on your previous shopping habits? Because it had access to data that pigeonholed you as a stressed-out parent who won’t notice that you’re being upcharged for medical supplies, especially at 5 a.m.? Because it could? This is known as surveillance pricing, and a recent study from the Federal Trade Commission suggests that it happens all the time.
To back up for a moment: Last July, the FTC asked eight large companies — including Mastercard, JPMorgan Chase, and Accenture — to turn over information about the data they collect on individual consumers and how it affects pricing. Investigators were particularly interested in middlemen hired by retailers to use algorithms to change and target prices for different markets — in other words, how they harness your personal information to determine whether (and when) they can charge you more. You know how Uber adjusts pricing based on location and demand? The FTC had reason to believe that companies were doing that with services and products they sold but microtargeted to customers based on their unique profiles — their age, their spending patterns, and even their tendency to order a specific thing at a certain time of night.
Late on January 17, in the final hours of the Biden administration, the FTC published the initial findings of its study, which was swiftly buried under an avalanche of Trump-related news. The report “revealed that details like a person’s precise location or browser history can be frequently used to target individual consumers with different prices for the same goods and services.” Then–FTC chair Lina Khan recommended that the FTC “continue to investigate surveillance pricing practices because Americans deserve to know how their private data is being used to set the prices they pay.”
Andrew N. Ferguson, Trump’s pick to replace Khan, dissented from the report, implying that the investigation will not continue. In the absence of concrete policy to oversee or regulate surveillance pricing, it can expand unchecked. That leaves normal consumers out here to fend for ourselves.
Corporate greed is not new, nor is it illegal. Retailers are always trying to charge the highest amount they can get away with — it’s the principle of supply and demand, and how they stay afloat. What is new, though, is the technology that retailers can use to predict what specific customers might be willing to pay and the opportunities to offer tailored pricing to individuals. (If you’re shopping online, how do you know if your price is different from another person’s? You don’t.) This is different from old-fashioned dynamic pricing — where prices go up or down for everyone depending on market demand — and much creepier.
If your bills continue to be all over the place, and you suspect that you’re getting ripped off simply because of your past shopping behavior, well — you’re not crazy. Here, policy experts share their advice on how to spot surveillance pricing and fight it when it happens.
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Be aware of how companies can profile you.
Unfortunately, it’s hard to know if you’ve received a personalized price unless you have the time and energy to compare prices with other shoppers. If you do, by all means, cross-check with friends, family members, neighbors, etc. But if you don’t, at least be aware of how your personal information might be used. “This study was helpful in showing the surveillance-pricing tools that are available to retailers,” says Lindsay Owens, an economic sociologist and the executive director of the Groundwork Collaborative, a nonprofit public-policy think tank in Washington, D.C. For instance, one use case found that a person identified as a first-time car buyer could be considered “less savvy about the options available” and given less favorable financing rates, fewer discounts, or more costly maintenance products at a car dealership.
The study also found that how you interact with retail sites — for instance, how far down the page you scroll, whether you click to page two of search results, or if you sort products by “newest” or “lowest to highest price” — can be tracked as well. “Retailers can use that data to get a better sense of your intent to purchase, and your financial sensitivity,” says Owens. “If you sort search results by highest to lowest price — well, you could imagine a world where the minute you do that, the price of everything goes up.” Or if you searched for a specific brand instead of, say, “black shoes,” then it may seem you’re already set on buying a certain pair, and you won’t be served a discount offer because your mind is already made up. Of course, it’s unrealistic to avoid doing these things, but bear in mind that your actions are likely being recorded in some way.
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Clear your cookies regularly, and, if you’re really freaked out, consider other privacy tools.
It’s annoying to clear your cache and cookies every time you shop online — not only do you have to remember to do it, but then you have to log back into every website you visit. Still, what you sacrifice in convenience, you potentially gain in privacy, says Owens. “Clearing your browser history, shopping in incognito mode, or using a private browser or VPN — all those things can be helpful,” she explains. (Don’t forget to clear your cookies on your phone, too.) If you’re really paranoid — understandable! — certain VPNs (virtual private networks), such as Mullvad and Norton, can protect your information much better than your standard internet service provider.
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Avoid shopping apps and accounts when you can.
“Increasingly, we all use shopping apps and store accounts, where there’s no way to clear your history,” says Owens. “Your app is personalized to you, with all of your purchases. They’re tracking your location. They know how close you are to the nearest store.”
These apps typically lure you in with deals and free shipping, but they’re not giving you special treatment out of the goodness of their hearts — they’re making money off of your information. You could, of course, set up dummy accounts to buy things, but who’s really going to do that? “I just try to avoid store apps when possible and shop in person where I can,” says Owens.
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Try to plan ahead.
Zephyr Teachout, an attorney and professor at Fordham University who specializes in antitrust law, points out that you’re more likely to be targeted with higher prices if you seem to be in a rush. “If you order a car service to go to a hospital, you might pay more than if you were going to a restaurant, because you’re presumably in a hurry,” she says. “Or, if your order history shows that you frequently pay for express delivery, your vibe is haste, and your prices might be higher.”
Of course, all of this is enraging. “There’s a gross feeling of unfairness when you’re paying a different price for the same product, because you’re being profiled and targeted,” says Teachout. “You don’t need to be an economist to see how it’s the seller exploiting its position of power, and the vast amount of intimate data points they have about people, to rip them off.”
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Make a stink — publicly.
“Complain,” says Teachout. “If you suspect you’ve been targeted by surveillance pricing, go to Reddit or wherever you post and share your story.” Public outrage is a powerful force, especially against large retailers who rely on their reputation to treat customers fairly. Nearly every time that a company has been publicly exposed for using exploitative pricing practices — for instance, when Coca-Cola put thermometers in its vending machines that made sodas more expensive on a hot day — customers have revolted, and the company has backtracked.
Even if you can’t prove you actually were profiled, it doesn’t hurt to speak up. “You might be wrong, but why not make the company prove that?” says Teachout. “We’re all living in a state of rational paranoia, and it creates this fog around pricing. We all deserve more transparency.”
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Push lawmakers to do something about it.
Ultimately, the onus should not be on the individual to fight surveillance pricing. “Besides writing about it publicly, tell your attorney general,” says Teachout. “The solution is policy, both at the federal and state level.” There are both federal and state laws that prohibit unfair or deceptive acts, and one could argue — as Teachout does — that surveillance pricing falls under this definition. “It functionally screws people over because of imbalances of power. And the core of personalized pricing is that a seller has a billion points of data on you that they can use to your disadvantage. It’s an unfair practice.”
Finally, Teachout believes that surveillance pricing could also be interpreted as a type of unlawful price gouging. Current laws bar retailers from jacking up prices when there’s some kind of major incident — for instance, stores in New York were prohibited from “charging excessive prices” for PPE and rubbing alcohol at the outset of the pandemic. “Existing price-gouging laws require a trigger — a declaration of emergency, or some other market disruption,” says Teachout. “Otherwise, companies are free to raise or lower prices based on demand.” But she believes that surveillance pricing is a different version of price gouging, on an individual level. “The trigger is not something that happens in the larger world. It’s that your baby is throwing up,” she explains. “I think it’s illegal.” Maybe the federal government won’t do anything about it, for now, but your state government might.
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