Congresswoman warns about 'dynamic pricing'

Practice charges consumer different prices

San Diego - Shoppers could be paying more for what they buy online based on where they live or what computer they use.

San Diego Rep. Susan Davis told Team 10 that's not fair, and she has a plan to change how companies use something called, "dynamic pricing."

"People's personal information can be used when they shop online to determine the price a particular good," said Davis.

She said companies collect information every time someone buys something online and that information could help determine how much someone is charged for a product.

Davis said without telling consumers, some internet companies use personal information - including browser history and IP address - to alter prices.

"Where they live, how many times they have shopped for that particular item, whether or not they have purchased quickly an item," said Davis.

Shoppers told Team 10 they knew information was collected during a transaction but didn't know it was used to determine the price.

Friends Connie Wong and Annie Chen dish over the latest online sales at lunch in San Diego.

"I love online shopping," said Wong.

"I guess I never really knew that was the case," said Chen about dynamic pricing.

Wong and Chen are just two of the 189 million people who do their shopping online in the U.S.

Steven Osinski is a sales and direct marketing professor at San Diego State University and the founder of 3Hr Learning who knows about the practice.

"Yes, someone in San Diego is going to probably pay more for something on-line than someone in Gary, Indiana," said Osinski.

He said dynamic pricing is nothing new and it happens online and also at the traditional the brick and mortar stores.

"Even in the retail environment, no two or three stores sell products for the exact same price and the consumer needs to be responsible for finding the best steals," Osinski said.

Davis introduced legislation to require that internet companies disclose whether they are adjusting a price based on a consumer's personal information.

The Ensuring Shoppers Honest Online Pricing (E-SHOP) Act would require an internet company to clearly and prominently disclose the use of a price-altering program to a consumer prior to the final purchase of a good or service.

"So that consumers know that their information is being used in the pricing," said Davis.

Osinski isn't convinced a disclaimer would do anything.

"This disclaimer will be hidden with 4,000 other disclaimers on every website so its just window dressing that won't do anything," said Osinski.

Davis is working to build support in the House for the legislation - getting cosponsors, and trying to get a hearing on bill.

 

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