How companies use personal data to charge different people different prices for the same product
Looking for bargains online? Who you are can affect what you pay
Ever notice how after online shopping or browsing, the advertisements you see on every website seem to have been personalized to include whatever you were looking for?
A Marketplace investigation reveals it's not just ads that your browsing history can affect — it's also the price you're charged.
Companies have the technology to personalize your price using data from your computer, and a Marketplace test shows they're using it.
Shoppers accessing the same website at the same time can be shown different prices for the same product.
"The more information they have on an individual, the more they can prey upon your needs or your desires" says Jesse Hirsh, a technology expert and internet strategist.
"[They can] charge you … more for something you really want, and maybe charge you less for something you're on the fence about as a way to persuade you to make that purchase," Hirsh says.
A CBC poll suggests 48 per cent of Canadians shop online at least monthly, and 51 per cent of us have booked a hotel room online in the past year.
How does the regulator monitor what the consumer marketplace is like if every consumer is their own marketplace?- Jesse Hirsh
Marketplace put hotels to the test for price discrimination. Three different types of shoppers searched the same destinations and dates at the same time and saw that some hotels were priced differently from browser to private browser or their phone.
Price differences were seen on several popular websites including Hotels.com, Travelocity and Priceline.
In a search on Hotels.com of New York City on New Year's Eve, the Belvedere was listed at $734 (all prices are in Canadian currency) on a regular browser. But on an incognito browser — one that doesn't show your computer's cookies — the price was cheaper at $712. We did the same search on a mobile phone and saw the cheaper price, $712, there too.
On the other hand, in a search on Priceline for a room in Orlando, Fla., the Radisson was more than $70 cheaper on the regular browser ($124) than the incognito browser ($198).
In a statement to CBC, Priceline said it doesn't raise prices based on a shopper's past online browsing, but it sometimes lowers them to offer a deal.
Hirsh likens online price discrimination to a virtual equivalent of haggling. Only in this case, we don't have the opportunity to negotiate back.
"I think that [negotiating] would be possible if we knew their logic," he says. "If we knew if gender or age or geography made a difference, like maybe my niece in Montreal should be booking my travel instead of me doing it from downtown Toronto."
We do know your perceived nationality can make a difference on Expedia-owned companies like Travelocity and Hotels.com.
We talked to Expedia Inc., and they acknowledge that they offer different types of travellers certain discounts.
'Tagged' as being in U.S.
After Expedia spent two days trying to deconstruct our searches, they concluded that, at least in the New York case, although the consumers were on the Canadian website, the browser had falsely "tagged" each of them as a U.S. shopper because they had been to the U.S. site before switching to the Canadian one.
"They went to the Hotels.com site first, which is our U.S. site, so they got tagged as a U.S. customer," said Sarah Gavin, global communications vice-president of Expedia Inc.
"Even though on the first [browser] they went back to Hotels.ca, they were still a U.S. customer, as far as our site was concerned," she said.
In other words, because the browser knew they'd been to a U.S. site, the shoppers didn't get the Canadian "deal" that the website would have offered. The incognito browser wouldn't have known they'd been on a U.S. site, so it would have assumed they were Canadian and gave them international travel deals.
"The incognito traveller was seen as a Canadian traveller," said Gavin. "And the other traveller was seen as a U.S. traveller, and there's absolutely different deals to be had."
The trouble is, if you visit the U.S. site first and get "tagged," you'd never know you were being quoted a higher price.
Expedia has not yet been able to explain why the price was cheaper in incognito for searches outside of the U.S., including Panama and Barcelona.
Gavin says hotels also sometimes give deals to consumers accessing the website from a mobile device.
"If you're on desktop, you may get a different price than if you're on mobile," Gavin said. "Those hotels want to incent those mobile users to show up at their site at the last minute. It's great for the hotel, and you know what, if you're a customer and you find that, fantastic."
I think going forward what we're going to find is that consumers use privacy like a currency.- Doug Stephens, futurist
Websites can gain information from your type of device, your IP address and your computer's cookies, which are small files stored on your computer by websites you visit.
Although there are ways to control a website's access to your computer's cookies, buckling down on your privacy settings may not necessarily be the best solution — at least not as far as your wallet is concerned.
"In some cases, you benefit from giving up a little bit of privacy, and in other cases you [pay more] for giving up that bit of privacy," Hirsh says.
Retail futurist and author Doug Stephens says he thinks that as consumers become more concerned about how their data is being used by companies, retailers will be forced to be more transparent.
"I think going forward what we're going to find is that consumers use privacy like a currency," says Stephens.
"We only have so much of that currency to give to individual retailers, and we're only going to be willing to give it when we feel like we're getting a fair one-to-one exchange."
He says that as retailers become more sophisticated about what they track, consumers are also becoming less guarded about what they're willing to share.
"What I've seen consistently is consumers saying, I want two things simultaneously: personalized recommendations — I want retailers to show me things that are relevant to me — but I also want privacy," he says.
"Unfortunately those things don't go together very well."
Marketplace asked CBC Research to conduct a poll Nov. 7-14 to find out about Canadians' shopping habits online. They surveyed 2,010 Canadians aged 18 and over who are members of the Angus Reid Forum, and the results are considered accurate within plus or minus 2.2 percentage points, 19 times out of 20.
The poll showed that seven in 10 Canadians are concerned about their behaviour/habits being tracked without their knowledge, and an equal proportion is also concerned about being offered different prices based on their browsing/search history and online shopping habits.
Eighty-four per cent of Canadians polled said that government should do more to regulate what companies do with our data.
Personalized pricing is not against the law unless it helps a company take over and dominate a market, according to the Ministry of Innovation, Science and Economic Development.
Hirsh says the regulators need to catch up.
"The Competition Bureau, for example, has a lot of great laws in theory, but it's difficult to apply those laws when every consumer gets a different experience," he says.
But changes may be on the way. The Office of the Privacy Commissioner recently proposed amendments to the Personal Information and Electronic Documents Act to make consent for using personal information more "meaningful," to provide alternatives to consent and to develop new strategies for governance.
In the meantime, Hirsh says consumers should feel emboldened.
"It's better to see the marketplace as a competition in which, from the consumer's perspective, you need to put in a bit of effort to get that cheaper price — or just don't spend."
With files from Luke Denne