Lana Hart is one Author, broadcaster and tutor from Christchurch.
OPINION: Two people go into a store and try on a pair of shoes.
One customer buys the shoes for $100 while the other, undecided, goes to the store next door to try on a similar pair of shoes.
Returning to the first store, the undecided customer learns that the original shoes are now $200.
This can happen when we book flights, buy products online, or schedule Uber rides.
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Automated pricing algorithms can vary a product’s prices based on factors that indicate a customer’s willingness to pay more for a product – such as: B. the number of visits to a website, the type of device used and other demographic and behavioral data considered relevant.
“Dynamic pricing” is used by major 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 same product, be it a seat on a flight, a product on an online shopping site, or a hotel room.
This data is stored in the web browser and fed into pricing algorithms and third-party networks such as Facebook/Meta and Google.
Because of this, some booking sites may offer the same product at a cheaper price if you browse for products in Incognito or Private mode, which only contains that session’s data, or by clearing your web browsing history, cookies and website data.
In short, large online businesses and marketplace-style websites change prices for 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 might not be anything technically illegal about these nasty strategies, but they leave a certain stench in your nostrils that’s hard to pin down: whether it’s the number of visits to a website, or the type of computer you’re browsing from, or the cost of a product to change?
In the murky, rapidly changing world of online pricing technology, it’s difficult to find the transparency consumers seek in privacy statements about a company’s use of personal information.
They may also “combine such information with other personally identifiable information we have collected about you…to…help us make our websites more relevant to you,” as they say, by tailoring offerings and content.
In this example, does adjusting offers based on the links I followed mean I see a different price than my neighbor?
The company’s chief financial officer should have answered that question in 2019 he announced to investors that “by the end of this year we will have a different price point for each customer”.
This follows the practices of most airlines in the world where Forms of dynamic pricing have become the international norm.
To be clear, this is more than simple supply and demand economics; We accept that prices change depending on market factors e.g. B. How far in advance do we book or if it is peak times.
Instead, these websites use data collected from your unique device to predict the highest price you’re willing to pay that day.
This prediction changes person by person, computer by computer, leading to the bizarre situation of two similar customers with different browsing histories paying different prices for the exact same product or service.
Consumers are increasingly confronted with business practices that involve more abstruse collection and use of personal data.
Australia recent judgment of the Federal Court of Justice against Google Using personal location data sent a message to big companies that “they must not mislead their customers”.
At a minimum, online businesses – particularly those in which the New Zealand Government is a majority shareholder – should provide visible and clearly articulated pricing transparency messages to website users where dynamic pricing involves the use of our personal information to set prices.
Covering up such strategies undermines customer loyalty, undermines corporate value systems and goodwill, and paints their brands with the oil of greed and distrust, which ultimately makes little financial sense.
Today marks the beginning Data Protection Week in New ZealandPromoting data protection awareness.
As automated technologies continue to creep into so many areas of our lives, it’s a good time to review privacy and competition laws and policies to keep up with unethical practices that lie quietly and invisibly behind the websites we visit and the Businesses that we think may emerge we love.