In the modern age, data is everything. Sometimes businesses take your data, whether you give it willingly or not. In other cases, people sell their data (such as grocery store loyalty cards, where data is given in exchange for discounts). We’ve become accustomed to companies like Google, Facebook, and Amazon tracking what we do and collecting our data.
Here, personal information is collected through various means, including app usage, location tracking, and social media interactions. This data is often used to target advertising, shape content recommendations, or share with third-party advertisers and data brokers.
But what about a business using your data and then charging you more for it?
From airline tickets and e-commerce to rideshares and food delivery, some companies are using your personal data to decide how much you pay for goods or services. This could mean you are paying more for the same thing compared to the person next to you.
This increasingly common practice has been highlighted by France Bélanger, a University Distinguished Professor in the Pamplin College of Business at Virginia Tech. Bélanger is an expert on privacy and surveillance pricing, This is a growing practice where businesses use consumer behaviour, market trends, competitor prices, and real-time data to tailor costs to each individual.
“If you’re logged into your preferred airline account, they know your flight history, how often you fly, whether you travel for business or leisure, and even which routes you rarely skip,” Bélanger explains in a research note. “That tells them how flexible you are and how high they can set the price.”
Are we now tolerant to individualised pricing?
How legitimate is this practice? In the U.S., currently, there is no regulation on companies using surveillance pricing, which may cause consumers to pay more.
“Many large companies do not want to change how they use consumer data,” Bélanger clarifies. “They are building detailed profiles for each consumer. Some will use these to market targeted products, while others may use the data to encourage us to pay more. Clearly, this type of strategy benefits the company far more than the consumer.”
According to Bélanger, consumers may either not be aware of this happening or have developed a societal tolerance for individual pricing.
“We are already used to not paying the same price for a seat on a plane or a rideshare service. Companies can now maximize the data available to them, paired with artificial intelligence, to monitor their online behavior for tailored pricing,” she warns.
Can we counteract how businesses use our data?
Bélanger offers some tips to combat surveillance pricing and increase your online privacy:
- Turn off location tracking so prices are not based on your location.
- Use incognito mode on a browser to limit sites from accessing search and preferences data.
- Search with an aggregator first, such as Google Flights, when purchasing airline tickets.
“The best way to protect yourself is to avoid giving away more information than necessary, ” she adds. “We all make choices that allow our data to be captured by organisations; however, everyone should reflect on what is really needed by the sites you use before you allow that data to be shared.”
