A few weeks ago, I wrote about the ways data-mining companies use your internet activity to develop an invasive profile of you without your knowledge or consent. Your age, gender, address, shopping habits, finances, web history and so on are combined to tailor advertising aimed at you as you surf the web, with sometimes shocking results. They also sell your profile for profit to other companies.
That sort of privacy invasion is at worst insulting and irritating. Now, however, it appears the stakes are considerably higher.
The Guardian reports that the same data-mining techniques are now being used to charge you higher prices than other people pay for the same things … a practice called “price discrimination.” And this renewed privacy invasion can cost you … if you let it.
They say you can’t beat the market, but that’s not always true. Let me show you how.
Economics textbooks tell us what happens when there’s only one seller of a product: They charge “monopoly prices.” There’s nowhere else to get what they sell, so they charge the maximum anyone will pay, and earn “monopoly profits” that far exceed their production costs. The same thing happens to a lesser degree when there are only a few sellers, as in the U.S. cable TV and broadband market.
Consider what happens, however, when a business in an otherwise competitive market is able to isolate you from other buyers by using sophisticated information about your buying habits, income, debt and other personal details. A gas station that knew you were out of gas, for example, could charge you double for a gallon — because you’d be stuck without it. You, on the other hand, have no idea that you’re being charged more than others for the same thing.
Companies are now using your data profile to do precisely this. Their goal is to get to a market of one, where each individual buyer is pitted against a more knowledgeable seller. Instead of standard prices and products offered to everyone, this “information asymmetry” allows companies to set prices specifically for you. Amazon already does this, as do numerous other web retailers. I’ve seen myself that my wife and I get different prices when we shop for the same item using our own accounts.
This has been brewing for some time. For example, a few years ago I read that users of Apple computers were being charged more by certain hotels and car rental agencies when they booked online. The hotels’ web systems detected little bits of code that identified Apple’s Safari browser. Apples cost more than most computers, ergo Apple users tend to be better off, ergo they can be charged more without noticing.
Time will tell whether this extends to everyday brick-and-mortar shopping. I can envisage a situation where companies that have “loyalty” card programs, like Starbucks, tap into vast databases to determine how much you’d likely pay for a cup of joe and a bagel and charge you accordingly.
Beat the Privacy Invasion
This sort of thing would make shopping like that movie scene where Chevy Chase asks the car repairman, “How much is this gonna cost me?” to which the sleazy mechanic replies “How much ya got?”
It doesn’t have to be this way. Here are some things you can do to make this privacy invasion and predatory pricing difficult or impossible for online retailers:
- Use the browser add-ons for Chrome or Firefox I mentioned in my earlier article to prevent your personal information from getting to data-miners.
- Go to OptoutPrescreen.com and opt out of “offers of credit or insurance.” Financial and insurance companies get your data from the three big credit bureaus, and often resell it to third parties who then use it to track and profile you. Do the same here.
- When signing up for a new service, always opt OUT when you’re asked “Do you want us to share your information with third parties who may have products that interest you?” etc.
- Refuse to give your email address to store clerks who ask for it checkout, or make one up.
- Use a proxy server, a virtual private network (VPN) or the TOR browser when shopping online to confuse retailers’ systems and prevent them from identifying you.
Be Invisible (Or At Least Blurry)
The goal of all this is to defeat the privacy invasion by rendering your “virtual self” invisible to marketers and firms — or just so blurry as to be unrecognizable.
That way, when you do transact, you’ll be what’s known as a “ghost” — an unknown quantity. Or at least, an unknown wallet…
Offshore and Asset Protection Editor