Consumer Reports supports AB 446, a California bill that would prohibit surveillance pricing.
Surveillance pricing, also sometimes referred to as “personalized” pricing, is when a company uses personal data that they’ve gathered about a consumer—like data about their online search history, or inferences about family structure, health conditions, or income—to set the price of a product offered to a consumer.
AB 446 would prohibit the use of a consumer’s personal data gathered by electronic surveillance technology to set a customized price. This includes, for example, data about a consumer’s race or weight, their parenthood status, their genetic information, the geometry of their face, their political affiliations, and their web-browsing history. AB 446 also prohibits the secret and automated use of personal data to target groups of individuals with prices. This is important because the fine-grained data that companies possess about consumers enables them to place individuals into highly specific groups.
AB 446 also has several reasonable exemptions. If a company offers different prices to different people based on differences in the cost of providing a good or service—like higher prices in regions with higher labor costs—that practice is not prohibited. The bill does not apply to discounts that are offered transparently, and that customers can access equally if they meet the clearly disclosed criteria.
Surveillance pricing can be difficult to detect because consumers rarely have a view into what information a company has about them, what the prices they see are based on, or what prices other customers may be seeing for the same product at the same store. Still, enterprising journalists have discovered examples:
- An investigative journalist writing for SFGate looked at the prices offered for a hotel room in Manhattan for a specific date, and varied his operating system, browser, cookies, and location (his computer’s IP address). He found that when he changed his IP address from a Bay Area location to locations in Phoenix and Kansas City, the prices dropped by more than $200 per night in one instance, and more than $511 in another instance.
- ProPublica found that test-prep company Princeton Review was offering different prices for its tutoring services depending on a customer’s zipcode. The result, they found, was that Asian customers were nearly twice as likely to receive a higher price.
- The Wall Street Journal reported that Orbitz, the travel aggregation company, determined that Mac users spent more per night on hotels than Windows users, and began steering Mac users towards pricier hotels.
- A Minnesota local news site discovered that Target changed the prices displayed on its app for certain products based on whether the customer—and their device—was physically inside a Target store. When the reporters looked at the Target app while inside a store, they found that a Graco car seat was $72 more expensive than when they had been sitting on the far side of the Target parking lot, and a Dyson vacuum was $148 more expensive.