Lana Hart is a Writer, animator and tutor based in Christchurch.
OPINION: Two people walk into a store and try on a pair of shoes.
One customer buys the shoes for $100, while the other, still undecided, goes to the nearby store to try on a similar pair of shoes.
Back at the first store, the undecided shopper learns that the original shoes are now $200.
Such a situation may arise when we book flights, buy products online or schedule Uber rides.
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Automated pricing algorithms can vary product prices based on factors that demonstrate a customer’s willingness to pay more for a product, such as the number of times they have visited a site, the type of device they use and other demographic and behavioral data. deemed relevant.
“Dynamic pricing” is used by large online retailers and booking sites that collect real-time data on purchase histories and previous searches to adjust prices.
This can result in two customers paying different prices for the exact same product, whether it’s a seat on a flight, a product on an online shopping site, or a hotel room. .
This data is stored on the web browser and fed into pricing algorithms and third-party networks such as Facebook/Meta and Google.
This is why on some booking sites, by searching for products in incognito or private mode – which only contains data from that session – or by deleting your web browser history, cookies and site data, the same product may be available at a cheaper price. .
In short, big online businesses and marketplace type websites change the prices of the same product or service based on their measurement of how much you are willing to pay for it.
They even gave the concept an acronym: WTP – Willingness to Pay.
Right now, there may not be anything technically illegal about these mean-spirited strategies, but they do leave a certain stench in your nose that’s hard to get rid of: the number of times you visit a site or the type of computer you are searching from change the price of a product?
In the murky and rapidly changing world of online pricing technology, it’s hard to find the transparency consumers want buried in privacy statements about a company’s use of personal data.
They may also “combine this information with other personal information we have collected about you…in order to…help us make our websites more relevant to you”, for example by tailoring offers and content.
In this example, does personalizing offers based on the links I’ve followed mean that I see a different price than my neighbor?
The company’s CFO may have answered that question in 2019 when he told investors that “we will have a different price for every different customer” by the end of this year.
This follows the practice of most airlines around the world in which forms of dynamic pricing have become the international standard.
To be clear, this is more than just supply and demand economics; we accept prices to change depending on market factors such as how far in advance we book or if it is peak hour pricing.
Instead, these sites use data collected from your unique device to predict the highest price you’re willing to pay that day.
This prediction changes person-to-person, computer-to-computer, resulting in the bizarre situation of two similar customers with different browsing histories paying different prices for precisely the same product or service.
Consumers are increasingly confronted with commercial practices that come with a more obscure collection and use of personal data.
The recent ruling by the Federal Court of Australia against Google’s use of personal location data has sent a message to large companies: “they must not mislead their customers”.
At the very least, online businesses – especially those whose majority shareholders are the New Zealand government – should provide visible and clearly worded price transparency messages to website users, if dynamic pricing includes the use of of our personal data for pricing.
Hiding such strategies erodes customer loyalty, undermines value systems and corporate goodwill, and greases their brands with the oil of greed and mistrust, which ultimately makes no financial sense.
Today marks the start of New Zealand Privacy Week, which promotes privacy awareness.
As automated technologies continue to creep into so many areas of our lives, now is a good time to review privacy and competition laws and policies to keep pace with the unethical practices that can emerge quietly and invisibly behind the sites we visit and the businesses we think of. we like.