Tracking your data to change prices online
PHOENIX — You do everything you know how to find the best price: research different websites, compare prices, look for sales and coupons.
Then when you look at this product later, you may find that the price has changed.
This may be because the online retailer is using your data to adjust the price and maximize that sale.
It’s not a new business strategy, it’s called “dynamic pricing” and it’s being used in stores and online.
It is the strategy of raising and lowering prices based on demand, season and competitors. It is also a means by which companies can profile a customer and use all possible information to make that sale at the best price.
Now, as more companies collect your data, they can customize the price based on what they know about you.
“So we call this price discrimination where, essentially, you have a different price that you’re trying to assign to each user,” Dr. Victor Benjamin, ASU assistant professor of information systems, told us. “Every online shopping company tries to understand as much information about their consumer as possible in order to optimize the price status assigned to a consumer.”
It’s also perfectly legal as long as the companies don’t change the price based on a person’s race, religion, nationality, or gender. However, they may use any other information about you to make an educated estimate of how much you might spend on a particular item.
“If they know you like baseball bats,” Benjamin explained, “they will try to tap into that knowledge and raise baseball bat prices for you specifically.”
So how do they build the profile in the first place? By tracking you down and gathering as much information about you as possible, Benjamin told us.
“They do this…by tracking your individual computer, dropping cookies on it, or looking at your browser history. They can also just look at your IP address,” Benjamin said. “So even if you switch browsers to incognito mode, it won’t necessarily help you because they’re using your internet address.”
Benjamin recalled the accusations against airlines, hotels and other travel booking sites a few years ago. They were accused of examining the type of browsers customers were using on their computers and using them to raise certain prices online.
These companies deny that their prices change for any reason other than supply and demand.
Benjamin explained, “So if you were using Safari as your browser, they assume you were using an iPhone or a Mac. And, perhaps, you come from a more affluent background. So they would actually price it accordingly and try to sell you a more expensive ticket than, for example, if you were logging into the same airline website using something like Firefox or Internet Explorer or Google Chrome, for example example.
So what can you do to ensure you get a fair price?
Dr. Benjamin suggests a few options:
Clear your cookies and browser history
o “Cookies” are small files that typically include unique identifiers that web servers can use to send to browsers. This is what you are usually asked to agree to when you come to a new website online. It’s also what saves your preferences, searches, and passwords. Plus, it lets companies remember products you like, send you suggestions, and learn about your online habits. This can be cleared by searching your operating system for the “delete cookies” option.
o Your browser is the program you use to make purchases online. Examples include Google Chrome, Safari, Internet Explorer and Firefox. Each browser will give you an option to delete your history. This is usually found in your “settings” or “preferences” tab.
o Benjamin further explained, “Before, you could get away with just clearing your cookies. I think these companies have become more advanced over time.
You can use “private” browsing on your phone or computer.
o Private Browsing is a feature that some apps offer users. When you use this mode, it creates a temporary session, away from your normal browser, and the details of this session are not saved.
Use a VPN or virtual private network.
o Benjamin said that a VPN can “redirect your connection through a proxy. So, [companies] would see that proxy’s internet address and not your private internet address and they would lose their ability to track you, just a little.
o You can find various VPN apps as well as computer programs. Some may hide your identity more than others, so do your research to see what kind of security each will give you.
o You can also get a VPN for your phone or tablet. These are apps that can be turned on and off and sometimes come with other security features.
o “There are some pretty robust VPN services out there that will offer you an app where you can just download it and open it. And, it lets you choose where you want your connection to route to where you want that proxy to be” , explained Benjamin.
As an expert, we asked Benjamin what he personally uses when shopping. He told us he uses a combination of all of these steps.
“I’m actually going to use my phone. I’m going to remove it from my home Wi-Fi. Just connect to the cellular connection. This gives me a different IP address; it’s a different computer, essentially. And I can use it to follow up and check the same price.
Our ABC15 Smart Shopper team went online and tested all these different security measures, on different websites and apps.
In our initial product searches, we didn’t find many changes when we searched from our phones and laptops. But, afterwards, we received several alerts and “deal” offers from retailers on the products we were looking for. So, sometimes it pays to wait and see if you’ll get a discount on the item you want.
There are also free apps and browser extensions like “Camel Camel Camel” that will show you the price history of items. However, Benjamin said people need to know that everything has a price online.
“Unfortunately, on the internet, if you give something away for free, chances are you’re the product,” Benjamin warned, “they’re giving you a service to use, but what they’re really doing through that service is is to monitor your following, buying habits and track your behaviors.And they may use this information to try to get a higher volume of sales from you by offering the right items or selling this analytics to others companies that may use them for marketing purposes.
Data collection is now an industry in its own right. Several companies have created artificial intelligence, or AI, programs designed to take all of this data and use it to alter prices.
“With data having such value, there are more and more organizations interested in trying to obtain, capture and store your data…And we’re seeing more and more companies start up whose main focus is this,” Benjamin said.
But how do you know which companies are tracking you and using this data to change their prices? Benjamin admitted it’s hard to know.
“It’s hard to predict who’s on top of the game, you know, doing that kind of consumer tracking and analysis,” Benjamin said. “It’s really hard to guess overall which industries are more affected than not or which companies. So it’s best to just take the approach of always trying to protect your privacy… and be somewhat agnostic about which industries are trying to get your data. Because at this point, they all are.
To combat this, Benjamin told us that there are now several groups on Twitter or Reddit looking to find the best deal on products and share it with the group online.
“You can subscribe to certain Twitter accounts, the sole purpose of which is to identify offers and inform users. So there are these social circles run by consumers to help each other. While organizations share data, we can share offers between us and try to help each other.”
Victor Benjamin is an assistant professor of information systems at ASU’s WP Carey School of Business. Dr. Benjamin earned his bachelor’s, master’s, and doctorate degrees from the University of Arizona. His research focuses on natural language processing, web crawling, cybersecurity, security computing, and social media analytics.