ORLANDO, Fla — “They’re listening to me. They know I want it.” That’s what Valerie Salazar told Action 9 about companies sending her personalized online shopping ads.
We all know our personal data is out there, but did you know companies could use the information they gather about you to charge a higher price while you’re shopping online?
Sara Geoghegan with the Electronic Privacy Information Center, or EPIC, said, “This is creepy and invasive, and ultimately, is not for our own good.”
For many, this doesn’t sound fair. Companies might charge a different price for a bargain hunter than they do an impulse shopper for the same item. It’s known as surveillance pricing. Some call it price discrimination.
When you shop in person, you know you’re getting the same price as everybody else because the price is printed right there on the shelf or on the packaging. On your computer or phone, you have no way to know if your favorite store is charging you more than another shopper, for the same item, at the same time. We found there’s a whole industry using your data to profile the price you pay.
Salazar actually prefers to shop in store since she gets to touch things and see them up close. She knows the price she pays is the same as everyone else in the store. But she has a young daughter and often shopping online is just easier and saves time. She and her fiancé are constantly ordering things for home delivery and have even become familiar with their delivery person.
“He’s our usual guy, but when we have multiple packages, we’ll end up having, like, more than one guy,” she said.
But if shopping online, how do you know the price you see on the screen is the same price your next-door neighbor sees? It’s a little harder, right? Companies are using that online isolation to target different people with different prices with the surveillance pricing.
According to Sara Geoghegan, “Companies know so much about our online shopping habits. Companies have very, very granular, detailed, robust profiles about us as consumers.”
Consumers could get charged a different price based on their shopping habits or history, demographics, geographic location or a wealth of other personal information retailers have on them.
“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,” Geoghegan said.
The Federal Trade Commission released initial findings of a study in January showing this is happening as it explored the potential impact on privacy, competition and consumer protection. The FTC found the goal of surveillance pricing is to maximize profits by charging customers the most they’re willing to pay for a product or service without them walking away. Under current administration that study’s status isn’t clear. When Action 9 reached out to ask about it, the FTC had no comment.
To try to catch it on camera, Action 9 teamed up with WFTV’s sister stations from around the country. Dozens of shoppers in eight cities checked the prices of six products, three times a day at some of the nation’s most popular stores. The stores include Best Buy, Home Depot, Lowe’s, Target and Walmart. Most of the prices stayed the same for the shoppers during the entire six days, but there were some differences within the group on various items.
In Orlando, WFTV investigative reporter Shannon Butler saw the cost of a grill at Lowe’s go from $299 to $369 after a few days. For all our other shoppers in central Florida the price stayed at $299.
One shopper near Atlanta, Georgia saw the same thing and the price seemed to fluctuate depending on location, even places just a few miles apart.
Experts Action 9 spoke with said it would be impossible to confirm the reason for price differences we spotted because the retailers use so many different factors in setting your price.
“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,” Geoghegan said.
Even though Salazar often shops around for the best price, she doesn’t like the idea of companies using information like this.
“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.
Walmart and Target both told Action 9 they do not use surveillance pricing.
A Walmart spokesperson followed up by sending this statement:
“Walmart adheres to an everyday low-price strategy focused on offering consistently low prices to deliver on our purpose of helping customers save money and live better. We know that price matters to our customers, and they can count on us to be an advocate for them to get the best prices possible."
The Home Depot sent this statement in response to the Action 9 inquiry about surveillance pricing:
“We go to great lengths to ensure consistent pricing for our customers throughout their entire experience with us across online and in our stores. Our customers may see price differences depending on what they have selected as their local store online, and those prices may vary based on geography. Pro Xtra members can qualify for discounts and other benefits.”
So far, Action 9 has not heard back from Lowe’s or Best Buy.
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