How Surveillance Pricing Is Making Your Life More Expensive (and What to Do About It)

Shopping has always been a battle. Companies work hard to convince you that their product is better, while also trying to ensure you pay the highest possible price for your purchase. That’s fair enough, and most of us are accustomed to researching everything we buy to make sure we’re not being ripped off.

But modern technology has changed the game. Companies have been hoovering up information about us for years now, and that means they have a pretty good idea about our shopping habits—including what we’re willing to pay for specific products and services, something called Individualized Consumer Data (ICD). New tools like artificial intelligence are now making it very, very easy for companies to engage in what’s known as surveillance pricing.

What is surveillance pricing?

As its most basic, surveillance pricing is when companies put together a profile of you and your shopping habits, then adjust prices specifically for you. A basic example would be shopping for a television: Two people go to Amazon to look at the same television. One person sees a price of $499, while the other sees $599—for the exact same television, at the exact same moment. The discrepancy is due to their different spending habits and other information that Amazon has gathered about them—their ICD—that tells the company that one person would be willing to spend that extra $100, and the other wouldn’t.

Companies create those profiles by scraping an incredibly large volume of information about you from a wide variety of sources. Internet cookies, your shopping history, your IP address (and the geographic and demographic information it provides), are just the basics—the profiling goes much deeper. Even behaviors like how far you scroll when searching for products or what you leave in your shopping cart and never buy contribute to a detailed picture of who you are as a consumer.

You might be thinking that most of your personal and financial information is protected to some extent by privacy laws and policies, and you would be right. A lot of this stuff is anonymized. But the sheer amount of information that you leak when you go online—not just cookies and IP addresses, but the browser you use, the plugins you have installed, your time zone, screen size, devices, even system fonts on your computer—can be collected to create a detailed “fingerprint” of your online life.

Combined with data gathered from loyalty apps and other sources, this means that an “anonymous” profile of you can be reliably created and identified. In other words, companies may not know that it’s you shopping for that TV, but they know that a unique consumer with specific habits is shopping for one, and thus they can tweak their pricing as needed very effectively.

The signs to look out for

What’s fun about surveillance pricing is how hard it is to tell it’s happening. After all, you surf to a site to buy something, you see a price, you assume that’s just the price that’s been calculated. How can you know that someone else will see a higher or lower price?

It’s not easy. You can look for a few subtle signs and try a few experiments if you suspect you’re running into surveillance pricing:

• Changed prices. If you go back to a specific website regularly and notice that the price changes, it might be because you’re using a different device or because some other aspect of your online fingerprint has changed. Or it might be because your ICD tells the company that you always visit multiple times looking for a lower price.

• Inconsistent pricing. If you know someone who is shopping for the same item on the same platform and they’re getting different pricing, that’s a potential clue.

• Reactive advertising. Even if you haven’t noticed price changes, seeing ads that are narrowly targeted to you can be a sign that ICD is being collected and used on you. For example, if web searches or comments on your social media channels seem to inspire related ads, there’s a good chance that your online fingerprint is specific enough to be used for surveillance pricing.

Defending against surveillance pricing

Surveillance pricing is harmful to consumers because it means you wind up paying more for items simply because of where you live or other extraneous factors—it’s inherently unfair. Defending against it, however, can be challenging—there are basically four strategies you can employ against surveillance pricing, and none of them are magic bullets.

Comparison shop

The simplest way to combat suspected surveillance pricing is to shop around for items at different stores—including physical locations, if possible—to get a clear idea of what the “normal” price should be. This can be time-consuming and not always effective, as different online platforms may all use similar surveillance techniques against you.

Another aspect of this is to engage your friends and family who live in different areas and use different devices (Android phones versus iPhones, for example). A news station recently had several people from around the country check the prices of different products online, and found prices swung by several hundred dollars depending on location and other factors. If you can ask people who live in different areas to check prices, you can at least determine if you’re getting an okay deal, comparatively.

Use a VPN

One of the most common pieces of advice whenever pricing issues come up is to use a Virtual Private Network (VPN) to mask your location—you’ve probably seen this advice in conjunction with finding the lowest airline prices for trips. It seems to make sense: If retailers are charging more for people living in affluent zip codes, changing your reported location should defend against that.

I tried this, using a VPN to change my IP address to locations in Mexico, the Netherlands, Japan, and different areas of the U.S., and actually saw no price changes whatsoever. One reason this might not work is because your IP address and associated location are just one piece of your online fingerprint, and companies can still track you when you mask it (your browser gives away a lot of information—you can see just how much at this site). Another reason this might not work as well as you expect is because companies can pretty easily tell that you’re using a VPN because the IP addresses they assign their users are used over and over again, often by several people at the same time. This creates patterns that allow companies to flag those IP addresses as VPNs.

However, that doesn’t mean that using a VPN is pointless in the fight against surveillance pricing. If you routinely surf the net behind a VPN and combine that with other steps like incognito browsing, regularly clearing cookies from your browser, and deleting your internet history, you deny trackers a wealth of information about you, which can help cloak your identity, making it harder to create that online fingerprint.

Avoid loyalty apps

Loyalty apps that offer coupons and discounts to regular shoppers are, of course, data vacuums that make it very easy to create a profile about you and your shopping habits. For a few measly discounts, you’re basically giving companies everything they could possibly need to track and profile you—and they can (and do) sell that information to other retailers. If you want to make it harder for them to use surveillance pricing against you, giving up those little perks is probably necessary.

Use different devices

The final piece of advice for defeating surveillance pricing is the one thing that did actually make a difference when I tested it. I randomly searched Amazon for a 65-inch TV made by TCL. On my desktop browser, it was listed at $469.95. When I switched to my phone, it was suddenly $479.00. Less than $10 isn’t a huge difference, but changing devices was the only strategy that yielded any results at all for me, and indicates that checking prices on different devices is an effective strategy for ensuring you’re getting the best possible price despite what your profile might say about your shopping habits.

Of course, all of this checking and device-swapping takes time and effort, so you have to consider whether the money you might save by getting around surveillance pricing is worth the time you put into it. Using a VPN with an incognito browser regularly is probably the best passive strategy you can employ to frustrate attempts to profile you without making it into a second job.

Last year the Federal Trade Commission opened an investigation into surveillance pricing, which could lead to new rules and enforcement to end the practice, and several states have some kind of legislation to regulate or ban the practice in the works. But until those become reality, keep your eyes open.

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