Use of Data for Discriminatory Pricing

Back in 1998, for the first LSC Summit on Legal Services Technology, I wrote in a paper:

Moreover, corporations are as intense in their collection of data about their consumers as they are of information about their workers.  Corporations will engage in intense and hidden discrimination based on the desirability of the consumer, their own history of a relationship with that consumer, and whatever other information they can obtain about the potential consumer from the web of computer systems.  Already, car rental companies obtain driving records from state computers.

Just as airlines now practice demand and yield management, offering radically different prices for the same service, corporations, except where forbidden, will create invisible price structures that respond to the cookie on your computer and your predicted value to the company.  This value will correlate very highly with income and assets, information already effectively available notwithstanding privacy concerns and prohibitions. . . .

Now, maybe I underestimated the potential scope of problem.  the New York Times reports on analysis of the use of buying habits to set prices in supermarkets — even when people are not buying through their mobile devices.

Airlines, hotels and rental cars have offered variable prices for years. Those prices, however, are almost always based on capacity and timing, or are given to groups — seniors get one discount, frequent users another.

Now grocers like Safeway and Kroger are going one step further, each offering differing methods to determine individualized prices. Hoping to improve razor-thin profit margins, they are creating specific offers and prices, based on shoppers’ behaviors, that could encourage them to spend more: a bigger box of Tide and bologna if the retailer’s data suggests a shopper has a large family, for example (and expensive bologna if the data indicates the shopper is not greatly price-conscious).

The pricing model is expected to extend to other grocery chains — and over time could displace standardized price tags. Even though the use of personal shopping data might raise privacy concerns among some consumers, retailers are counting on most people accepting the trade-off if it means they get a better price for a product they want.

“If our consumer information is right, personalization is really a consumer desire right now, not so much a consumer fear,” said Michael R. Minasi, president for marketing at Safeway.

It not a step much further to decide who the desirable customers are, based on address, purchasing habits, credit rating, status as purchasing leaders, etc.

Hardly good news for poor people.  We need to be much more proactive about long term economic distributive effects of technology.

P.S. the full 1998 paper can be read here.

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About richardzorza

I am deeply involved in access to justice and the patient voice movement.
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