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How companies use your information to get the most money from you

Online shopping
Posted at 10:32 PM, Feb 07, 2022
and last updated 2022-02-08 00:33:01-05

PHOENIX — You do everything you know to find the best price: searching different websites, comparing prices, looking for sales and coupons.

Then, when you look at that product later you may see that the price has changed.

It could be because the online retailer is using your data to adjust the price and maximize that sale.

This isn’t a new business strategy, it’s called “dynamic pricing” and is used in stores and online.

It is the strategy of raising and lowering prices based on demand, season, and competitors. It's also a means by which companies can profile a customer and use any information they can to make that sale at the best price.

Now, as more companies collect your data, they can personalize the price depending on what they know about you.

“So, we call this price discrimination where, essentially, you have a different price you try to assign per user,” ASU Assistant Professor of Information Systems Dr. Victor Benjamin told us. “Every online shopping firm is trying to understand as much information about their consumer as possible to optimize the price state assigned to a consumer.”

This is also perfectly legal to do so long as companies don’t change the price based on a person’s race, religion, nationality, or gender. However, they can use any other information about you to make an educated guess on how much you might spend on a particular item.

“If they know that you like baseball bats,” Benjamin explained, “they will try to exploit that knowledge and increase the prices of baseball bats for you specifically.”

So, how do they build the profile in the first place? By tracking and gathering as much information on you as they can, Benjamin told us.

“They do it… by tracking your individual computer, by dropping cookies on it or looking at your browser history. They may also just look at your IP address,” Benjamin said. “So, even if you switch browsers to go into private browsing mode, that won’t necessarily help you because they are using your internet address.”

Benjamin recalled accusations that were made against airlines, hotels, and other travel booking websites a few years ago. They were accused of looking at the type of browsers customers were using on their computers and using that to raise some prices online.

These companies deny that their prices change for any other reason than supply and demand.

Benjamin explained, “So, if you were using Safari as your browser, they assume that you were using an iPhone or Mac. And, perhaps, you are from a more affluent background. So, they would actually price accordingly and try to sell you a more expensive ticket than, say, if you connected to the same airline website using something like Firefox or Internet Explorer or Google Chrome, for example.”

So, what can you do to make sure you’re getting a fair price?

Dr. Benjamin suggests a few options:

Clear your Cookies and Browser history

o “Cookies” are small files that usually include unique identifiers web servers can use to send to browsers. This is what you typically are asked to accept when you get on a new website online. It is also what saves your preferences, searches, and passwords. Plus, it allows companies to remember what products you like, send you suggestions and learn more about your habits online. This can be cleared by searching your operating system for the “delete cookies” option.

o Your browser is the program you use to shop online. Examples include Google Chrome, Safari, Internet Explorer, and Firefox. Each browser will give you an option to delete your history. This is typically found in your “settings” or “preferences” tab.

o Benjamin explained more, “used to be that you could get away with just clearing your cookies. I think these firms have become more advanced over time.”

You can use “private” browsing on your phone or computer.

o Private browsing is a feature some applications offer to users. When using this mode, it creates a temporary session, away from your normal browser, and the details of that session are not saved.

Use a VPN, or Virtual Private Network.

o Benjamin said that a VPN can, “reroute your connection through a proxy. So, [companies] would see the internet address of that proxy and not your private internet address and they lose their ability to track you, just a little bit.”

o You can find various VPN apps as well as computer programs. Some can mask your identity more than others, so do your research to see what kind of security each one 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 fairly robust VPN services that will offer you an application where you can just download it and open it up. And, it lets you choose where you want to route your connection to where you want that proxy to be,” Benjamin explained.

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 will actually use my phone. I will take it off my home Wi-Fi. Just connect to the, you know, cellular connection. That gives me a different IP address; it’s a different computer, essentially. And I can use that to go 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 as we searched from our phones and laptops. But, afterward, 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’s 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, everything has a price online.

“Unfortunately, on the internet, if you’re giving anything away for free, it’s likely that you are the product,” Benjamin warned, “they give you a service to use, but what they’re really doing through that service is to monitor your tracking, your shopping habits, and track your behaviors. And they can use that information to try to get a higher volume of sales from you by pushing the right items, or by selling that, you know, analytics to other firms who might use it for marketing purposes.”

Data collection is now an industry on its own. There are several companies that have created artificial intelligence, or AI, programs that are designed to take all this data and use it to change 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 businesses start up whose main focus is this," Benjamin stated.

But, how do you know what companies are tracking you and using that data to change their prices? Benjamin admitted that it is hard to know.

“It’s hard to predict who is on top of the game of, you know, doing this sort of consumer tracking and analytics,” Benjamin said. “It’s really hard to guess across the board, what industries are more into this than not or what firms. So, it’s better to just take the approach of always trying to safeguard your privacy… and kind of be agnostic as to what 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 that are all about finding the best deal on products and sharing that with the online group.

“You can subscribe to some Twitter accounts, whose sole purpose is to identify deals and notify users. So, there are these grassroot consumer-run social circles to help each other out. While the organizations are sharing out data, we can share deals amongst each other and try to help each other out.”

Victor Benjamin is an assistant professor of information systems at the W.P. Carey School of Business at ASU. Dr. Benjamin earned his bachelor’s, master’s, and doctorate at the University of Arizona. His research is in the area of natural language processing, web mining, cybersecurity, security informatics, and social media analytics.