But modern technology has changed the game. Companies have been hoovering up information about us for years now, and that means they have a pretty good idea about our shopping habits—including what we’re willing to pay for specific products and services, something called Individualized Consumer Data (ICD). New tools like artificial intelligence are now making it very, very easy for companies to engage in what’s known as surveillance pricing.
Companies create those profiles by scraping an incredibly large volume of information about you from a wide variety of sources. Internet cookies, your shopping history, your IP address (and the geographic and demographic information it provides), are just the basics—the profiling goes much deeper. Even behaviors like how far you scroll when searching for products or what you leave in your shopping cart and never buy contribute to a detailed picture of who you are as a consumer.
Combined with data gathered from loyalty apps and other sources, this means that an “anonymous” profile of you can be reliably created and identified. In other words, companies may not know that it’s you shopping for that TV, but they know that a unique consumer with specific habits is shopping for one, and thus they can tweak their pricing as needed very effectively.
The signs to look out for
It’s not easy. You can look for a few subtle signs and try a few experiments if you suspect you’re running into surveillance pricing:
Inconsistent pricing. If you know someone who is shopping for the same item on the same platform and they’re getting different pricing, that’s a potential clue.
Defending against surveillance pricing
Surveillance pricing is harmful to consumers because it means you wind up paying more for items simply because of where you live or other extraneous factors—it’s inherently unfair. Defending against it, however, can be challenging—there are basically four strategies you can employ against surveillance pricing, and none of them are magic bullets.
Another aspect of this is to engage your friends and family who live in different areas and use different devices (Android phones versus iPhones, for example). A news station recently had several people from around the country check the prices of different products online, and found prices swung by several hundred dollars depending on location and other factors. If you can ask people who live in different areas to check prices, you can at least determine if you’re getting an okay deal, comparatively.
Use a VPN
I tried this, using a VPN to change my IP address to locations in Mexico, the Netherlands, Japan, and different areas of the U.S., and actually saw no price changes whatsoever. One reason this might not work is because your IP address and associated location are just one piece of your online fingerprint, and companies can still track you when you mask it (your browser gives away a lot of information—you can see just how much at this site). Another reason this might not work as well as you expect is because companies can pretty easily tell that you’re using a VPN because the IP addresses they assign their users are used over and over again, often by several people at the same time. This creates patterns that allow companies to flag those IP addresses as VPNs.
Loyalty apps that offer coupons and discounts to regular shoppers are, of course, data vacuums that make it very easy to create a profile about you and your shopping habits. For a few measly discounts, you’re basically giving companies everything they could possibly need to track and profile you—and they can (and do) sell that information to other retailers. If you want to make it harder for them to use surveillance pricing against you, giving up those little perks is probably necessary.
Use different devices
Of course, all of this checking and device-swapping takes time and effort, so you have to consider whether the money you might save by getting around surveillance pricing is worth the time you put into it. Using a VPN with an incognito browser regularly is probably the best passive strategy you can employ to frustrate attempts to profile you without making it into a second job.
Last year the Federal Trade Commission opened an investigation into surveillance pricing, which could lead to new rules and enforcement to end the practice, and several states have some kind of legislation to regulate or ban the practice in the works. But until those become reality, keep your eyes open.
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