04 May 2016

Retailers are Using Your Online Activity to Make You Pay More

In recent briefings, we have reported on Internet criminals’ behavior with regards to researching their victims’ professional profiles and associations (using LinkedIn recruiter tools, for example) and using these social cues to lure unsuspecting victims into sending money to imposter accounts.

Even if you have not been targeted in this way, if you use online shopping websites or web-based email services like Gmail, your online activity is constantly being recorded and used by retailers and marketers to extract the maximum amount of revenue contribution from you.

Often, your online activity feeds these retailers data that allows them to target you with a price manipulation scheme called “price discrimination”, whereby you will be subjected to a different price (either higher or lower) than others viewing the same exact product or service online. This method of showing different shoppers different prices for the same product at the same time based on information a retailer knows about a shopper (price discrimination) is legal.

The idea of being discriminated against based on socio-economic and behavioral data online is unsettling to many. A phone survey conducted by the Annenberg Public Policy Center of the University of Pennsylvania reported that 76% of respondents agreed that “it would bother me to learn that other people pay less than I do for the same products.”

Websites change prices based on many types of data points: customers’ online habits, words that appear in email in their Inbox, browser type, the type of device they use (i.e. iPhone, Android, Mac, PC, version), operating system, login status, time spent on online watch/preorder lists, geography, other websites visited, search term history, time of day, offline shopping habits (such as data from store loyalty programs), and more. If you have location services enabled on your device when you are browsing a web store, your device’s geo-locator may tell the e-tailer your location, which they may use to offer you different pricing.

Northeastern University recently published a comprehensive study across commonly used retail websites. As an example of their findings, Home Depot shows shoppers higher pricing (relative to brick-and-mortar prices) if they search using a mobile device, and even higher prices if the mobile OS is Android. Why might they do this? Perhaps it is to give their customers greater satisfaction from going into a store, checking a price using their phone, and discovering that the item in their hands is a great deal, leading to a higher probability of a purchase.

Some companies will charge you more if you are a Mac user. Why? Perhaps they assume that Mac users pay more for their computers and therefore have a higher “willingness to pay” for other goods and services. Orbitz executives, for example, confirmed to the Wall Street Journal, that the company had “experimented” with showing different hotel offers to Mac vs. PC visitors.

In light of these sophisticated price discrimination tactics, what can you do to gain more control of your online shopping experience? Try deleting your browser cookies and logging out of any online accounts before an online search, if you believe that your behavior profile may be used against you. Use time to your advantage. When you put an item in your shopping cart, but abandon the cart without buying, some online retailers will cut the price to close the deal.

Assume your online behavior is tracked. Also, assume the content of the email in your recipient’s inbox is automatically culled and associated with you (if you send to an @ Gmail, Hotmail, Outlook.com, MSN, Yahoo, AOL, or other similar email address). Note, a simple way to prevent your email content from being culled is to use RPost’s executive mode email encryption.