To Fight Surveillance Pricing, We Need Privacy First

Digital surveillance is ubiquitous. Corporate snoops collect information about everything we do, everywhere we go, and everyone we communicate with. Then they compile it, store it, and use it against us.  

Increasingly, companies exploit this information to set individualized prices based on personal characteristics and behavior. This “surveillance pricing” allows retailers to charge two people different prices for the exact same product, based on information that the law should protect, such as your internet browsing history, physical location, and credit history. Fortunately, the Federal Trade Commission (FTC) is stepping up with a new investigation of this dangerous practice.  

What is Surveillance Pricing? 

Surveillance pricing analyzes massive troves of your personal information to predict the price you would be willing to pay for an item—and charge you accordingly. Retailers can charge a higher price when it thinks you can afford to spend more—on payday, for example. Or when you need something the most, such as in an emergency.  

For example, in 2019, investigative journalists revealed that prices on the Target app increased depending on a user’s location. The app collected the user’s geolocation information. The company charged significantly higher prices when a user was in a Target parking lot than it did when a user was somewhere else. These price increases were reportedly based on the assumption that a user who has already traveled to the store is committed to buying the product, and is therefore willing to pay more, whereas other shoppers may need a greater incentive to travel to the store and purchase the product. 

Similarly, Staples used users’ location information to charge higher online prices to customers with fewer options nearby. The website did this by offering lower prices to customers located within approximately 20 miles of a brick-and-mortar OfficeMax or Office Depot store.   

Surveillance Pricing Hurts Us All 

The American privacy deficit makes surveillance pricing possible. Unlike many other countries, the U.S. lacks a comprehensive privacy law. As a result, companies can often surveil us with impunity. Unregulated data brokerages buy and sell the enormous amounts of information generated every time you swipe a credit card, browse the internet, visit the doctor, drive your car, or simply move through the world while in possession of a mobile phone. And it is difficult to shield yourself from prying eyes.  

Corporate surveillance yields comprehensive—but often inaccurate and unappealable—personal profiles. Surveillance pricing uses these profiles to set prices for everything from homes to groceries.  

This is fundamentally unfair. You have a human right to privacy (even though U.S. lawmakers haven’t updated privacy laws in decades). You shouldn’t be spied on, period. And constant surveillance pricing compromises your ability to freely use the internet without fear of adverse economic consequences.  

Worse, surveillance pricing will often have disparate impacts on people of color and those living in poverty, who have historically suffered greater price increases when companies adopted AI-powered pricing tools. For example, an algorithmic pricing model used by the Princeton Review—a test prep company—allegedly charged higher prices to Asian American customers than to customers of other racial backgrounds. Likewise, ridesharing apps—such as Uber and Lyft—have charged higher fares to residents of neighborhoods with more residents of color and residents living below the poverty line. 

Further, surveillance pricing tools are notoriously opaque.