Random Penguin House/Lindsay Owens/NPR
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Over the past decade, companies have changed the way they price their products and buyers are being deliberately overcharged.
Hotels create prices based on a guest’s geolocation. Airlines use navigation data to determine the cost of the plane ticket. Grocery stores are using technology to test how much they can charge their customers.
“What we’re seeing is that big tech is reinventing the scam,” says Lindsay Owens, head of the consumer advocacy group Groundwork Collaborative. “These are old tricks, but they’ve been made stronger by new technology.”
Owens, author of a new book published in September, Scam: The end of the fair price – and what it means for your walletuncovers the pricing schemes that companies try to hide and shares tips on how to protect yourself from these tactics.
“The most egregious method is personalized pricing,” says Owens. Retailers “collect data about you to better determine how much they can charge you.” This includes browsing data, demographic data and purchase history. They also use algorithms to conduct pricing experiments with consumers.
However, there are ways to get a fair deal. Owens explains how to cover your tracks so it’s harder for retailers to monitor you and then sell you products at personalized prices. Maybe you don’t use all of these techniques for small purchases, like a pair of shoes, but for expensive flights or other trips, it might be worth it.
Avoid purchasing through retailer apps
Some retailers offer perks and discounts to customers if they purchase items using their app or website. But the incentives aren’t worth it, Owens says.
When you’re online, you’re providing these companies with “a lot of information about yourself,” she says. This includes your location and purchase history. They “even know what you click on and don’t buy.”
They may also conduct experiments on you, such as determining “what’s wrong with you,” Owens says. “Will she buy it for $5?” $7? $12?
You’re offering a lot of data that can “potentially be turned against you in pricing decisions, whether it’s fewer discounts or higher prices,” she says.
Before making a major purchase, such as a plane ticket, a new computer or a rental car, take the time to check prices in several ways. This can save you money. Save or take a screenshot of this checklist to use as a reference.
Malaka Gharib/NPR
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Malaka Gharib/NPR
Discover the new way to compare prices
Comparison shopping means going to multiple retailers to check prices to find the best deal. Today, that also means making sure “you’re not exposed to personalized pricing,” Owens says.
There are many ways to do this. Keep in mind that this may take time, but it may be worth it for big-ticket items. Check the price of a product or service across multiple devices, when you’re logged in, offline, with and without incognito mode, and with and without a virtual private network (VPN), says Owens. You can also ask your friends to check prices on their devices.
Let’s say you buy a sweater. You may want to check the price at the brand’s clothing store at the mall, on the brand’s website, and ask your friend to look up the price on their phone to make sure you’re getting the best price, Owens says.
Make it harder for businesses to track your data
Regularly clear your browsing data and cookies. Companies collect data while you browse online. “If you can erase this data before making a purchase, the company won’t be able to use it against you,” says Owens.
You can browse your devices and limit the permissions you give to apps. Do your apps really need to know your location? Can you disable cross-app sharing so that one app doesn’t share data with another app?
Consider using a VPN to hide your location, which can be used to charge you more. You can even conduct your own pricing experiments using your VPN to change your location, says Owens. “See if you can get a more competitive price coming from a different space,” like the San Francisco Bay Area versus Nashville, Tennessee, for example.
Shop in person, but keep in mind that personalized pricing is also creeping into major retailers
If you can, buy products from local mom-and-pop stores. If it’s a service you’re looking for, try doing it the old-fashioned way. Take a taxi instead of ordering a ride via an app. Call your local restaurant, order food and pick it up instead of using a delivery app.
These smaller companies may be more expensive and less convenient, but they’re less likely to conduct “ultra-sophisticated algorithmic pricing experiments on you,” Owens says.
But a lot of this technology is seeping into physical stores, making prices more unpredictable, she says.
Electronic shelf labels, for example, are emerging at big-box retailers and grocery stores. These labels allow retailers to change the price of a product at any time, leading to “more price variations throughout the grocery store,” Owens says.
Some retailers are also removing price tags altogether. “Without a listed price, it creates a lot of uncertainty for people on a budget,” she says.
If you’re frustrated by all these schemes, here’s some good news. Some states are starting to ban personalized pricing. On October 1, a new law will take effect in Maryland prohibiting the use of personalized or dynamic pricing in grocery stores and third-party delivery services. And other states are considering similar bans.
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5 Costly Mistakes Travelers Make When Planning Their Vacation. People get a lot wrong when it comes to paying for vacations, travel experts say, and it can cost a lot of money. Here’s how to plan a trip that’s safe, adventurous, and on budget.
7 Surprising Ways the Public Library Can Save You Money. Baking dishes, legal help, language courses and more: libraries can offer much more than books. Check to see if your local branch offers these free or discounted resources and services.
This digital story was edited by Sylvie Douglis and Lauren Gonzalez. The visual editor is CJ Riculan.
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