PROF. REICH: Corporations have a shady new way to charge you more for something than anyone else is paying. 

It’s a tactic called “surveillance pricing.” To explain it, here’s one of the top experts on the subject, former Federal Trade Commission Chair Lina Khan. 

LINA: Imagine you’re at your local electronics store buying a new TV for $500.

You think you’re getting a good deal, but as the cashier rings you up, you notice someone else buying the exact same TV —  for $400.

And the customer next to them? They’re only paying $350.

As far as you can tell, there was no special discount available — no loyalty card that could explain this. So what gives?

You’d be outraged. You’d demand to know why you were being charged more than someone else for the exact same TV on the exact same day.

Well, what if I told you that corporations may already be doing this when you shop online? 

You see, every day our phones and devices collect massive amounts of our personal data. And now, businesses may be using this trove of personal information to charge each of us a different price for the exact same product or service.

When I was Chair of the FTC, we launched an investigation into this shadowy world of surveillance pricing. 

Our initial findings revealed that retailers across many industries can use third-party data brokers to build a comprehensive profile of you. They can track your location, your race, your income level, your past online purchases, your browser history — even your mouse movements on a webpage featuring a video like this one.

They can then use your own personal data against you to predict your “pain point” — the highest amount of money you’re willing to spend on a good or service. 

And unlike being in a physical store where you see the same price tag as everyone else, online shopping is an individualized experience. You probably wouldn’t even realize that you’re being charged more than someone else for the exact same product.

Now, it’s true that some businesses have historically charged different prices for different customers based on characteristics like age. Think senior citizens getting discounts at restaurants. 

PROF. REICH: Boomers get everything, don’t we?

LINA: And you might have heard of “dynamic pricing” — when businesses charge you more for a product or service during peak times, when demand may outstrip supply. Like taxis charging more during rush hour.

But “surveillance pricing” is different. It’s when businesses use your personal data, including about whatever is happening in your life on any given day, to set whatever price they think they can get away with charging.

Imagine you’re a new parent and your baby is sick. A corporation could charge you a higher price for a thermometer or medicine, because they know a new parent will be more desperate.

Or maybe a loved one dies and you need to travel on short-notice. You could be charged more for a plane ticket if you received an email about funeral arrangements.

These surveillance practices are opaque — so we don’t know the full extent of how our personal information is being used against us.

But consumer watchdogs and researchers have identified just some of the ways businesses are already doing this.

The Princeton Review reportedly charged more for test prep services to online customers from zip codes that contained higher Asian populations.

Evidence shows that ridesharing apps are charging different prices for the same exact rides. Why? It’s not entirely clear, but researchers ran tests and found that riders with lower battery life on their phone were charged more. 

Travelers booking tickets on travel websites with IP addresses in the San Francisco Bay Area were charged up to $500 more per night for the exact same hotel rooms than travelers from less affluent cities — regardless of whether or not the buyer was actually wealthy.

And some internet service providers in the U.S. have reportedly been charging higher prices for lower internet speeds in poor, less white neighborhoods. 

It’s already clear that businesses have the incentive and ability to unleash surveillance pricing. So what can we do to stop corporations from using our personal data to rip us off?

As we recommended in our report, the FTC should continue to investigate surveillance pricing practices because Americans deserve to know how their private data is being used.

And with that research, lawmakers should consider passing more stringent consumer protection and privacy laws that protect us from this type of price discrimination. Some states have already introduced bills that would ban surveillance pricing altogether. 

You can also take steps to limit how much data firms can collect on you — including by regularly clearing your search history and cookies, or using a private browser or VPN. 

People have a right to know how their personal data is being used. And businesses shouldn’t be able to weaponize our own data against us — charging each of us a different price just because they can.