CHARLOTTE — “We all know our personal data is out there,” said Action 9 Investigator Jason Stoogenke. “But some companies use it to charge you more when you shop online.”
Stoogenke says there’s an entire industry that uses your habits and demographics to determine the price you pay.
Valerie Salazar looks for deals online.
“Sometimes I’ll go on Amazon, and I’ll be like, ‘Oh, let me check Walmart real quick,’” she said.
However, companies may keep an eye on her, tracking who she is, how she shops, and what she buys to potentially charge her a different price than what others pay.
“Honestly, I am not very happy about that,” Salazar said.
It’s known as surveillance pricing. Some call it price discrimination, Stoogenke said.
“So, it’s a form of individualized pricing that actually hurts the consumer rather than helps,” said Riley Dugan with the University of Dayton’s business school. “Surveillance pricing is basically using information about a consumer, whether it be demographic information, past purchasing history, even mouse clicks on a web page to sort of determine what is the most they’d be willing to pay for a product. And then essentially charging them that amount.”
“This is why it’s such a nefarious practice. You don’t know this is opaque. It’s impossible to know for the average consumer,” said Sara Geoghegan, with the Electronic Privacy Information Center. “It is why we need regulators like the Federal Trade Commission to open up the hood and see what’s happening behind these black box algorithms.”
The Federal Trade Commission studied surveillance pricing. It released initial findings a few months ago and found some retailers track your “mouse movements on a webpage” and the “type of products” you leave in your “online shopping cart” to figure out how much to charge you specifically.
“Consumers think this is very unfair,” said Alan Mislove, who used to work at the FTC as a privacy analyst. “They feel like they’re getting ripped off.”
Stoogenke said, “To be fair, prices can vary for all sorts of reasons: local sales, loyalty discounts, where you live, and more.”
For example, retailers may struggle to sell grills in Boston during March since it still feels like winter there, while Charlotte enjoys spring weather. Shoppers in Boston may get a better deal on the same model from the same retailer at the same time.
Action 9 teamed up with dozens of colleagues at its sister TV stations in seven states. They checked online prices for identical products on the same days at around the same time.
The participants varied in age, race, income level, and shopping habits. In many cases, prices were the same, but not always, Stoogenke said. For example, a TV at Walmart was about $878 for some, $898 for others. For one team member in Atlanta, it was more than $1,000.
“Why? That’s what’s so tricky to pin down,” Stoogenke said.
“Just because you and I receive a different price doesn’t necessarily mean that it is surveillance pricing,” Mislove said.
Target and Walmart told Action 9 that they don’t use surveillance pricing.
However, shoppers we spoke with have strong feelings about those retailers who do use the practice.
“Nobody should track your spending habits. That’s like them being in your purse. So, you definitely don’t want that,” consumer Larry Owens said.
“I never would have thought that ‘Oh, they’re going to charge so and so $2 cheaper than what I’m getting it for.’ So not cool,” Salazar said.
So what can you do about it?
First and foremost, Stoogenke is always concerned about your privacy.
So, when apps ask you for permission to do something involving your privacy, say no.
And remember this: You may see a different price depending on what device you use or whether you’re on your home’s WiFi compared to your cell service. So check different combinations before checking out. It may save you money.
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