New York lawmakers have passed the One Fair Price Act, a bill that aims to prevent businesses from setting individualized prices for consumers based on their personal information. If signed into law by Governor Hochul, New York would join Connecticut and Maryland in taking official action against what is known as "surveillance pricing."
Surveillance pricing involves companies tracking user data, including browsing history, location, device type, and purchase patterns, to adjust online prices. This practice can lead to two individuals seeing different prices for the same item, even when adding it to their carts simultaneously, with neither being aware of the discrepancy. Unlike surge pricing, which is typically disclosed during periods of high demand, surveillance pricing is described as invisible and personal.
Critics argue that this method is a form of algorithmic price gouging, exploiting consumer data to maximize profits. "Surveillance pricing is the intersection of two things Americans hate: being spied on and being overcharged," said Lindsay Owens, author of the upcoming book "Gouged: The End of a Fair Price — and What That Means for Your Wallet."
Companies may use various data points to determine a consumer's perceived willingness to pay. This can include the type of computer used, with some services potentially charging Apple device users more, assuming higher income levels and less price sensitivity. Other methods have included patenting systems that assess a user's battery level, suggesting a user with a low battery might be more desperate for a service, such as a rideshare.
While some sectors, like airlines and hotels, already employ dynamic pricing strategies based on market demand and consumer behavior, the personalized nature of surveillance pricing raises new concerns. Airlines, for example, have long collected extensive customer data through loyalty programs and credit cards, which can inform targeted pricing strategies. Historically, airlines have adjusted prices based on assumptions about traveler types, such as charging more for tickets that did not include weekends, assuming these were business travelers willing to pay a premium.
Some retailers have been observed charging returning customers higher prices than first-time shoppers or offering better deals only to users arriving from specific websites. Customer loyalty programs, intended to reward customers, may inadvertently lead to fewer discounts for engaged users.
Concerns extend to older adults, who may be targeted due to demographic and behavioral characteristics, particularly for high-need items like medical equipment. The urgency and limited options associated with purchasing items like lift chairs or mobility scooters can contribute to personalized pricing algorithms.
Consumers seeking to mitigate surveillance pricing can employ several strategies. These include using private or incognito browsing modes, clearing cookies regularly, shopping as a guest without logging in, utilizing a VPN to mask location data, and comparing prices across different devices. Opting out of loyalty and rewards programs can also limit the data companies collect on purchasing habits and browsing history, although online trackers and data brokers can still gather information.
For travelers, some airlines offer trip credits if the fare drops between the purchase date and the flight date. AI-powered tracking tools are also available to monitor flight prices and automatically secure credits when fares decrease.
Proponents of the One Fair Price Act emphasize that the burden of navigating these pricing tactics should not fall on consumers. "I feel very strongly that it should not be the consumer’s job to duck and dodge and bob and weave to beat the machine," Owens stated. "I think policymakers have to step in, set the rules of the road and restore fair pricing practices in this country."