The New Pricing Scam: How Surveillance Pricing Exploits Us All

Surveillance pricing is not just a technical issue; it's a moral one

Imagine booking an Uber ride on your shiny new iPhone 16, only to discover it costs $10 more than the same trip booked on your friend’s older Android. Why? Because companies are watching you - tracking your device, your location, even your income -and jacking up prices based on what they think you’ll pay. Welcome to surveillance pricing, a sneaky practice where big corporations exploit your personal data to charge you more. In Australia, there’s little to stop them, leaving you exposed to this digital price gouging. How did we get here, and what can you do about it? Let’s dive into the murky world of surveillance pricing, from its origins to its ethical failures, and uncover how you can fight back.

Origin and Development of Surveillance Pricing

Surveillance pricing, also known as personalised or dynamic pricing, has its roots in the broader trend of data-driven decision-making and the commodification of personal data. The concept began to gain traction with the advent of big data and advanced analytics in the late 20th and early 21st centuries. Companies started realising that they could leverage vast amounts of consumer data to tailor prices to individual willingness to pay, thereby maximising profits.

The idea can be traced back to economic theories of price discrimination, which have been discussed in academic circles for decades. However, the technological capability to implement such strategies on a large scale emerged with the rise of the internet, e-commerce, and sophisticated algorithms. Companies like Amazon, which have been pioneers in using customer data to influence pricing, are often cited as early adopters of these practices.

Lina Khan, in her role as a legal scholar and later as Chair of the Federal Trade Commission (FTC) in the United States, has been instrumental in bringing attention to the darker side of these practices, particularly how they exploit personal data. Her work has highlighted how surveillance pricing moves beyond traditional price discrimination by using invasive data collection methods. Although Khan's work is primarily focused on the U.S., her insights are highly relevant to Australia, where similar practices are emerging.

Consumer Protection and Data Privacy in Australia

Consumer protection against surveillance pricing is currently inadequate in Australia, as existing laws often lag behind technological advancements. The Australian Competition and Consumer Commission (ACCC) has some authority under the Competition and Consumer Act 2010 to address unfair or deceptive practices, but specific regulations targeting surveillance pricing are still developing. The lack of robust data privacy laws, compared to the European Union's General Data Protection Regulation (GDPR), leaves Australian consumers vulnerable.

Lina Khan's advocacy for stronger consumer protection laws is crucial here. She has pushed for investigations into how companies use personal data for pricing, as evidenced by the FTC's 2024 orders to eight companies seeking information on surveillance pricing practices. This initiative aims to understand the extent of the problem and potentially lead to new regulations. In Australia, similar investigations could be spearheaded by the ACCC, but they require political will and public pressure.

To protect personal data, individuals can take several steps:

• Clear Cookies and Use Incognito Mode: Regularly clearing browser cookies and using incognito or private browsing modes can limit the data collected by websites.

• Use VPNs: Virtual Private Networks (VPNs) can mask your IP address and location, making it harder for companies to track your online behaviour.

• Limit Data Sharing: Be cautious about the information you share online and with apps. Adjust privacy settings to restrict data collection.

• Advocate for Legislation: Support and push for laws that enhance data privacy and limit the use of personal data for pricing, such as amendments to the Privacy Act 1988.

Exploitation by Big Companies

Big companies exploit personal data by collecting and analysing vast amounts of information about consumers' behaviour, preferences, and financial status. This data can include browsing history, location, income level, past purchases, and even biometric data. Algorithms then use this information to predict how much a consumer is willing to pay for a product or service, often charging higher prices to those perceived as having higher willingness or ability to pay.

For example, the video mentioned by Robert Reich highlights how the Princeton Review reportedly charged more for test prep services in zip codes with higher Asian populations, and how ride-sharing apps and travel websites adjust prices based on location and device data. These practices can lead to unfair pricing, where marginalised or vulnerable groups are disproportionately affected. In Australia, similar exploitation could occur in sectors like online retail, travel, and telecommunications, where companies like Qantas or Telstra might adjust prices based on consumer data.

As someone who has worked in sales and business, advocating for fair and ethical practices, I find this trend deeply disturbing. The exploitation of personal data for profit maximisation undermines the trust between businesses and consumers, eroding the very foundation of ethical commerce.

Implications and Future Trends

Surveillance pricing is a manifestation of surveillance capitalism, a term coined by Shoshana Zuboff to describe the commodification of personal data by corporations. This trend prioritises profit maximisation and shareholder returns over consumer welfare and privacy. The wealthy benefit disproportionately because they can afford the higher prices, while the less affluent are often excluded or overcharged.

This practice represents a peak in profit maximisation strategies that exploit consumer data, but it also risks alienating customers and eroding trust in brands. The long-term sustainability of such practices is questionable, as public backlash and regulatory intervention could force changes. In Australia, the growing awareness of data privacy issues, coupled with international pressure, might lead to stricter regulations, but only if citizens and advocacy groups demand it.

Ethics and Moral Disengagement

Using Albert Bandura's eight mechanisms of moral disengagement, we can assess the ethics of surveillance pricing. These mechanisms allow individuals and organisations to engage in unethical behaviour without feeling guilt. Let's apply them to surveillance pricing, rating each from 1 (morally engaged) to 7 (highly morally disengaged):

• Moral Justification (Rating: 6)
  Companies may justify surveillance pricing by arguing it enhances efficiency and personalisation, benefiting consumers. However, this justification often ignores the harm caused by data exploitation.

• Euphemistic Labelling (Rating: 6)
  Terms like "personalised pricing" or "dynamic pricing" soften the reality of surveillance and exploitation, making it seem less harmful.

• Advantageous Comparison (Rating: 5)
  Companies might compare surveillance pricing to other pricing strategies, suggesting it's no worse than traditional price discrimination, thus normalising it.

• Displacement of Responsibility (Rating: 7)
  Corporations often shift responsibility to consumers, blaming them for not protecting their data or understanding the pricing model.

• Diffusion of Responsibility (Rating: 6)
  The complexity of data ecosystems means responsibility is diffused across multiple actors (e.g. data brokers, tech companies), reducing individual accountability.

• Distortion of Consequences (Rating: 7)
  Companies minimise the negative impacts of surveillance pricing, focusing on benefits like convenience while ignoring privacy invasions and price unfairness.

• Dehumanisation (Rating: 5)
  Consumers are often treated as data points rather than individuals, which can dehumanise them and justify exploitative practices.

• Attribution of Blame (Rating: 6)
  Firms might blame consumers for their data being collected (e.g. "You agreed to the terms of service"), shifting blame away from corporate actions.

Overall, surveillance pricing scores high on moral disengagement (average rating around 6), indicating a significant ethical lapse. Companies are highly disengaged from the moral implications of their actions, prioritising profit over consumer welfare. This is particularly alarming for those of us who advocate for ethical business practices, as it represents a blatant disregard for consumer rights and fairness.

Fighting Back as Citizens and Customers

This is a very serious issue. How do we fight back as citizens and customers? Do we stop buying online? Fighting back against surveillance pricing requires a multi-faceted approach:

• Legislative Action: Support and advocate for laws that ban or regulate surveillance pricing. States like New York and California in the U.S. are already moving in this direction, and Australia should follow suit. Push for amendments to the Privacy Act 1988 and stronger ACCC oversight.

• Consumer Awareness: Educate others about the risks of surveillance pricing and how to protect personal data. Share this article and others like it to raise awareness.

• Collective Action: Join or form consumer advocacy groups to pressure companies and lawmakers. Groups like Choice in Australia can play a pivotal role in this.

• Alternative Purchasing: While stopping online buying entirely is extreme, consider using cash or anonymous payment methods for sensitive purchases. Support businesses that commit to transparent pricing, such as local retailers or ethical e-commerce platforms.

• Technological Countermeasures: Use tools like ad blockers, privacy-focused browsers (e.g. Brave), and encrypted communication to limit data collection. VPNs are particularly useful in Australia, where internet service providers might otherwise track your online activity.

Conclusion: A Call to Action for Australian Consumers

Surveillance pricing is a warning sign of deeper issues in data privacy and corporate ethics. Lina Khan's work and recent research underscore the need for immediate action to protect ordinary people from exploitation. As Australian consumers, we must demand transparency and fairness in pricing, ensuring that our data is not used against us.

For those of us who have worked in sales and business, advocating for fair and ethical practices, this trend is a stark reminder of the importance of our role. Surveillance pricing is not just a technical issue; it's a moral one. The mechanisms of moral disengagement outlined by Bandura reveal how companies justify their actions, but we must not let them off the hook. This is exploitation, plain and simple, and it threatens the very fabric of consumer trust.

Let this article serve as a call to action.

Demand better from your government, your businesses, and yourself.

Protect your data, support ethical practices, and fight for a future where profit does not come at the expense of privacy and fairness.

You know what to do.

Onward we press

References

• FTC's 2024 Report on Surveillance Pricing

• Jacobin's analysis on the emerging danger of surveillance pricing

• Shoshana Zuboff's work on surveillance capitalism

• Albert Bandura's theory of moral disengagement

• Australian Competition and Consumer Commission (ACCC) reports on consumer protection

• Privacy Act 1988 (Australia)