All’s not fair in love and Internet shopping. And a new study, entitled
“Open to Exploitation” shows that online shoppers are clueless about their vulnerability to abuse from retailers.
As detailed by Joseph Turrow of the Annenberg Public Policy Center of the University of Pennsylvania, the study showed that as much as 64% of Americans do not know that it is legal for online stores to charge different people different prices based on their past shopping habits.
In a practice known as “price customization,” online retailers crawl under the radar to track online buying habits, noting if the customer does any comparison-shopping on other sites and if the shopper seems to be brand loyal. Once the information is gathered and processed, retailers will often adjust the price accordingly.
An example was given where a photography site was found to be charging different prices for the same digital cameras. Prices were determined by whether the customer had browsed other websites.
Collecting records of consumer buying habits and shopping behavior and then setting the prices accordingly is generally legal—on line or offline, as long as the price change isn’t based on race or gender and doesn’t violate anti-trust or price fixing laws.
Eighty-seven percent of those surveyed objected to this practice, believing strongly that prices should be the same for everybody, and were appalled that their habits were monitored.
Amazon.com found itself in consumer hot water in 2000 when a loyal customer deleted the regular customer identifying tags from his computer only to find that the price of a DVD changed from $26.24 to $22.74. Amazon denied any sinister dealings saying it was the result of a random price test and offered a refund to buyers who had paid higher prices.
“As society moves further into the twenty-first century, prices that vary based on firms’ information about us could become an increasing feature of the marketplace. Consumers who are not aware of how price discrimination works, of what rights they hold when it comes to companies’ using knowledge about them, and of how to respond to these circumstances may find themselves consistently paying more than others for the same products,” said Turrow.
Here are some more findings:
· 68% of American adults who have used the internet in the past month believe incorrectly that “a site such as Expedia or Orbitz that compares prices on different airlines must include the lowest airline prices.”
· • 49% cannot detect illegal “phishing”—the activity where crooks posing as banks send emails to consumers that ask them to click on a link wanting them to verify their account.
· • 66% cannot correctly name even one of the three U.S. credit reporting agencies (Equifax, Experian, and TransUnion) that could keep them aware of their credit worthiness and whether someone is stealing their identity.
Turrow used the data from the survey to urge government agencies to pass regulations requiring more disclosures, privacy protections, and consumer education. In addition to the study, Turrow also published
“Seventeen Facts Americans Shoppers Need to Know.”
Online Shoppers Not Very Market Savvy
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