Surveillance Pricing: Why Personalized Pricing is a Lie

Ever go shopping for something, get distracted, only to come back later to find a totally different price and wonder if you had been hallucinating?

Inflation has dropped drastically over the past four years. Grocery prices went up nearly 20 percent anyway. If you’ve ever looked at your cart total and felt like you were being robbed, you might not have been imagining it. Surveillance pricing is real. 

Here’s how surveillance pricing hurts consumers, why it violates privacy, and what you can do to steer clear. 

What is surveillance pricing? 

When companies collect your personal information to “personalize” the price you see for a product or service or even your mortgage, that’s surveillance pricing. It sounds fairly harmless until you realize the reason behind it is to make sure companies can squeeze the most amount of money possible out of their customers. 

There are other names for it, like personalized pricing and dynamic pricing. Most consumers are still unaware of what all of those often actually mean. 

Surveillance pricing is everywhere in the world of online shopping and smartphone apps. With the help of electronic shelf labels and facial recognition, it’s now coming to your local grocery store. Electronic shelf labels let retailers change prices in real time, while facial recognition lets them know who is in the store and connect customers’ faces with their buying habits and history. 

How does surveillance pricing work? 

Today, your data is the biggest commodity, and it’s leading to higher prices nearly everywhere you look. 

Companies across the world collect, share, and sell data to fuel surveillance pricing. That data includes:

• Mouse movements, hovers, and clicks
• Abandoned e-tail carts
• Search history
• Operating system and device type 
• Geolocation regarding affluence and proximity to a competitor.
• Home address and property value
• Credit card spend, debt, and occupation
• Education and employment
• Purchase history
• Loyalty program activity
• App usage and social media history
• Language and system settings
• Physical and mental health data

How do retailers get all that info? 

The apps on your phone are a primary source. Here are a few documented cases. 

BetterHelp is a mental health app that shared sensitive personal data with advertisers, until it caught the notice of the FTC. 

Instacart’s app collects and shares your name, email, user ID, address, phone number, approximate location, and app activity with its partners, according to its listing in the Google Play store. 

Other apps and loyalty programs collect religious and political affiliations, sexual orientation, and more.

And most of that data is for sale. 

Surveillance pricing examples

How can surveillance pricing turn your personal data into real-world harm? 

1. Mortgage payments go up

Mortgages are a prime example that we’re far too familiar with. Scientific American reported that dynamic mortgage costs potentially lead to discrimination and higher prices for lower income brackets. 

2. Grocery prices increase

Your dinner table is another easy target. While Instacart categorically denied using surveillance pricing, research showed that the company displayed prices that varied up to 23 percent depending on the customer before the company discontinued AI-based pricing late last year. The result? Some customers paid an extra $1200 for groceries per year. 

3. Retailers exploit food sensitivities

Retailers can also exploit surveillance pricing to get more money out of people who can’t afford not to pay. One example the former FTC chair Lina Khan shared was regarding nut allergies. If a parent has a child with a nut allergy, that parent will most likely pay more for nut-free products. 

4. Sellers use inexperience against shoppers

Inexperience sometimes means higher prices as well. New parents may see higher prices for baby thermometers, according to the FTC. This may be because they’re less aware of what things should cost from experience, so companies know they can charge more. New car buyers may see higher-priced items and add-ons first on kiosks in dealerships. 

5. Airlines and stores take advantage of desperation and necessity

Time-sensitive purchases or household necessities often cost more. Individuals traveling for a funeral may pay higher ticket prices. The Wall Street Journal reported that Home Depot charged individuals in affluent areas lower prices. 

6. Online retailers ‘personalize’ based on devices

Retailers can charge more or less depending on the device you use. Journalists say Amazon sometimes shows different prices on laptops vs. smartphones. This raises costs in areas where smartphones are less common or affordable. 

Is surveillance pricing legal? 

For the most part, surveillance pricing is still legal across the United States. Lawmakers face an uphill battle. Big Tech makes billions of dollars off personal data sales every year, and companies that employ ‘dynamic pricing’ see significant profit increases. 

Still, states like California and New York are working to address the issue, and some senators have proposed bills to prohibit some forms of surveillance pricing at a federal level, so far without much success. 

Key Laws and Proposed Legislation

With the help of privacy-minded lawmakers and advocates, we expect to see these kinds of protections spread further in the coming years. 

Is surveillance pricing the same as dynamic pricing? 

When websites say “personalized pricing” or “dynamic pricing,” take note. There’s a good chance it’s actually surveillance pricing. 

True dynamic pricing is supposed to be based on external factors, not personal data. For example, holiday pricing, pricing based on time of day, and pricing based on demand are all examples of dynamic pricing that don’t rely on your personal information. 

Many companies claim to engage in this kind of dynamic pricing. Whether that is true or they wander into surveillance pricing territory is up to regulatory authorities like the FTC to determine. 

What companies use surveillance pricing? 

The FTC and other authorities have launched investigations into many companies, but most of those investigations are still ongoing, and most of the companies outright deny using personal data to fuel pricing changes. 

With that in mind, here’s a list of companies under investigation for engaging in or enabling surveillance pricing. 

• Mastercard
• JPMorgan Chase
• Accenture
• McKinsey & Co.
• Bloomreach
• PROS Inc.
• Revionics
• Task Software
• Instacart
• Uber
• Lyft
• Booking Holdings
• Expedia Group
• American Airlines
• Delta Air Lines
• Southwest Airlines
• United Airlines

The actual number of companies that contribute to this surveillance economy, however, is unknowable. 

How to fight surveillance pricing

As Lora Kelley of the New York Times wrote, “The practice [of surveillance pricing] is at the intersection of two things people hate: feeling watched and feeling ripped off.” Here’s how to fight back .

1. Use cash to buy whenever possible

If you use cash at checkout, you uncouple your purchases from your digital identity. This makes it difficult for retailers to track your preferences and habits. When it’s practical, head to the ATM before a grocery run. That said, most surveillance pricing happens online. 

2. Hide your location

One of the primary data points used against you is your location. In some instances, individuals from less affluent areas may pay less. In other cases, they may pay more. 

When possible, don’t allow websites or apps to access your location. Some apps may not function without access to your location, and now you know why.

One solution: use a VPN. A VPN reroutes your traffic to hide your actual location. You can usually choose which region you want to reroute your traffic through. 

Note that this may violate some websites’ terms of service. You could even be blocked entirely, so use this tactic with caution. 

3. Ditch loyalty apps

I recently wrote an article that broke down the privacy issues with loyalty apps. When I started researching the article, I genuinely thought loyalty apps might be worth the privacy violations for some people given the savings they get. The trouble is, loyalty apps don’t actually save much money for consumers. If they did, companies wouldn’t use them. 

They are, however, great for retailers who want to engage in surveillance pricing. Every purchase, the contents of your online cart, and your app interactions let stores know exactly how much you’re willing to pay for various products. Plus many loyalty apps sell that data to third parties, so it can spread way beyond the retailer you’re directly interacting with. 

Check your loyalty app permissions and think twice before you swipe your loyalty card. 

4. Clear your cache

Clear your cookies and search history to reduce the amount of information a retailer has about you when you visit their website. A recent FTC analysis confirmed that retailers use your search history to influence pricing. 

5. Remove yourself from data brokers

Data brokers collect your location, age, and other personal information. Retailers buy profiles in giant bundles to inform pricing. Opt out where you can or let a data privacy solution like DeleteMe do the work for you. 

6. Push for better legislation

Make surveillance pricing one of the considerations for who you vote for, and write to your local lawmakers about the issues with this widespread practice. Donate to advocacy groups like the EFF that fight against consumer threats like surveillance pricing. 

Your voice matters. 

Final thoughts

Surveillance pricing is a participatory phenomenon. Opt out where you can, push back, and spread the word. Eventually the law will catch up with the practice. Till then, the most powerful thing you have working for you is knowing how it works.

Learn more

• Try out our free scan to see where your information might be exposed and put you at greater risk of scams online.
• Discover how privacy policies trick you so companies can misuse your data.
• Learn more about surveillance pricing from the EFF.