Consumers Vulnerable to Profiling, Price Discrimination

Published in Epic news.

A new report released by the Annenberg Public Policy Center shows thatconsumers are largely unaware of how their personal information is usedby businesses, and they object to behavioral profiling, pricediscrimination, and the purchase of their personal information fromdatabase companies. The report also found that the respondentsincorrectly believe that "laws prevent online and offline stores fromselling their personal information," and that "stores cannot charge themdifferent prices based on what they know about them."

The report isbased on a phone survey of 1,500 Internet-using adults. It focuses ontwo trends that are driven by the collection of personal information:behavioral targeting, where individuals are presented different productsbased on their shopping habits; and price discrimination, whereindividuals are charged differently based on what the business knowsabout consumers.Using "first degree" price discrimination, a company can determine themaximum that an individual is willing to pay for a product, and engagein "dynamic" pricing. This enables sellers to hawk the same products atthe same time to different people at different prices. Dynamic pricingis even easier to employ in an online environment, where users aretracked by registration data and cookies.