Worried you’re being overcharged when shopping online? Listen to this

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0:17Lindsay Owens:I have a VPN and I've seen the price of a rental car change dramatically based on whether I had my VPN on and also if I check back a different day. It could change by$200 or something like that. Yeah, this is the way that Americans are starting to understand that something pretty big has shifted in the economy and that that is the way pricing works. We used to sort of assume that there was a standard price for items. And I think little experiments like the one you just described are becoming more and more common. And they're the ways in which many Americans realize that everything has changed about pricing.

1:04Lindsay Owens:Hey, it's Marielle Cigarra. You're listening to Life Kit. And you just heard from Lindsay Owens, author of the book Gouged, The End of a Fair Price and What That Means for Your Wallet. Lindsay has a Ph.D. in sociology and researches economic forces like inflation. And she says technology has changed the way retailers price everyday items. Groceries, plane tickets, that shirt you have your eye on. Pricing has gone high tech. And in many ways what we're seeing is big tech sort of reinventing the ripoff. You know, these are old tricks, but they've been supercharged by new technologies. And companies are not necessarily being secretive about this.

1:46Someone took to Twitter to mention that the price of their airline ticket had increased$200, you know, overnight on JetBlue. And they tweeted, look, man, I'm just trying to get to a funeral. Like, what gives here? And JetBlue tweeted back, have you tried clearing your cash and your cookies? Oh my God, stop. Yeah, this was JetBlue's own Twitter account. Like company Twitter. And it was this kind of unbelievable confession in broad daylight by corporate America that your data decides your price these days. And if you want a better price, you should try tricking us.

2:30Lindsay Owens:Wow. Now JetBlue did later delete this tweet. And in a statement to NPR, the company said it does not engage in surveillance pricing or use personal information or web browsing history to set individual prices. The company also said the reply to the Twitter complaint was an error made by a customer service rep and that the suggested steps would not have changed the airfare. But a congressional inquiry was launched to investigate whether JetBlue uses surveillance pricing. And a class action lawsuit was filed against JetBlue earlier this year, accusing the company of tracking customer data and using that to set prices.

3:11Lindsay Owens:On this episode of Life Kit, I talk with Lindsay about how pricing has drastically changed and what we can do about it, including how to cover up your trail so it's harder for retailers to watch you and then sell you stuff at personalized prices. We'll also talk about what comparison shopping means now.

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5:15Lindsay Owens:Lindsay says when you ask Americans, what is a fair price? They often point to something called cost plus pricing. Basically, they like the idea that the price is based on how much it costs to make the item. plus a little bit of margin for the seller. They're fine with that too, right? They don't expect you to sell at a loss or to break even. And what we find when we look at these experiments is when you start giving people experimental conditions that veer from cost plus pricing. So we're charging you more because it's snowing outside and we think we can charge you more for a shovel, not because it costs more to make the shovel that we have on our shelf.

5:53People get really upset about that. They feel like that's very unfair.

5:56Lindsay Owens:Right. Right. It's like plus a margin, but not a ridiculous margin. Yeah. And, you know, we often get into conversations about pricing, particularly when resources are scarce. And so we obviously had this in a national conversation about World Cup ticket prices over the summer. You know, FIFA's decision to use dynamic pricing for soccer tickets for the first time ever in actually in the organization's history, in which effectively auctions off. the tickets to the highest bidder. And how does this relate to cost plus? Well, of course, this is not about how much the ticket costs. This is about the market determining how willing you are to pay, right?

6:40And the people who are willing to pay the most are deemed to value the ticket the most.

6:44Lindsay Owens:When you look at a sentence like whoever values it most will pay the most, that's assuming that everyone has an equal amount of money to pay from, right? Like someone could really value something, but the most they can legitimately pay for it without going broke is X, you know, and then someone else can value it very little, but they have a ton of money. So yeah, okay, I'll buy it. You know, it doesn't really make sense to tie value to money in a country where there's so much wealth inequality. A hundred percent. And when you ration or allocate scarce resources that way, you know, like what you insure is that you're going to get John Arnold and Bill Gates and people like that enjoying the World Cup.

7:30And you're actually going to have really passionate fans who would value that experience. You know, I mean, they almost sort of couldn't put a dollar amount on how much they value that experience, you know, watching it at a sports bar on their couch.

7:43Lindsay Owens:How has the way companies price their products changed over the past, say, five or 10 years? The most, I think, egregious way is this idea of personalized pricing. This is sometimes better known as surveillance pricing, but it is the intersection of two things that the American people just hate. The first is being spied on, and the second is being overcharged. And personalized pricing marries those two terrible features of corporate America and the economy, right? The idea is collect data on you to better ascertain how much they can charge you. So a good example of this, to go back to your VPN example, is there was a study a while back out of San Francisco, which showed that Expedia was charging people from the Bay Area more than people from Middle America for the same hotel room in Manhattan.

8:46So the idea being the hotel in Manhattan doesn't have a price. You and our estimate of your net worth based on where you're logging on from is going to determine that price.

9:00Lindsay Owens:Takeaway one, pricing has gone high tech. One of the most surprising examples is personalized pricing, also called surveillance pricing. Companies will use your browsing data, demographics and purchase history to decide what to charge you. Retailers will also use algorithms to run pricing experiments. And the best example of this, my organization late last year exposed a massive experiment that Instacart was running on millions of Americans while they were shopping for their groceries. They were basically using a platform that they had bought from an AI company called Eversight to run A-B tests on Americans to figure out how much they would pay for every item in their grocery cart.

9:45And what we found is even people logging on to pick up their groceries from the exact same pickup location at the exact same time, the exact same grocery items, you know, were being charged as much as 23 % more than other shoppers at the same time. You know, companies have always really run A-B tests in the store, right?

10:04Lindsay Owens:For instance, a retailer might test out a different price for the same item at two different store locations. But they're sort of able to do this on a totally different scale, totally hidden from site. This was one of the things that Eversight, you know, really bragged about when they built this price experimentation platform is, you know, the feature of this is that, you know, your customers won't know what's happening. You can run these tests without their knowledge. Yeah, because I think the idea of going into a physical store and picking up an umbrella and then, you know, the person behind you picks up the same umbrella and that you'd get into the same line and check out and you would get charged a dollar more than the person behind you.

10:48Lindsay Owens:That makes me want to flip a table. But that is what's happening online. Yeah, that is exactly what is possible online because we're atomized, We're isolated. The social context is gone. I have no idea that I just paid$3 more than you for the same umbrella. And so we're not mad about it. And we go about our day. And they pocket the$3. Coming up, Lindsay's tips on how to get around surveillance pricing. Retailers run their experiments, and you can too.

11:25This is Ira Glass. On This American Life, we tell stories about when things change. Like for this guy, David, whose entire life took a sharp, unexpected, and very unpleasant turn. And it did take me a while to realize it's basically because the monkey pressed the button. That's right. Because the monkey pressed the button. Surprising stories every week, wherever you get your podcasts. How do products end up on big box shelves? Well, we at Planet Money pitch the Planet Money board game. I'm trying not to think how much of a big deal it is and how much work has gone into. It's really big. Is it helpful if I remind you how big it is?

12:03It's sort of the whole thing. We go inside the minds of the people who decide what goes on store shelves. Listen to Planet Money on the NPR app or wherever you get your podcasts.

12:16Lindsay Owens:Takeaway two. Lindsay's first tip to duck and weave and avoid surveillance pricing is to stop shopping through apps or while signed into a particular retailer's website. site. Loyalty programs and in-app shopping are ways in which you give companies not only a lot of information about yourself, your location, you also give them full information about your purchase history. They know what you click on, they know what you buy, they know what you click on and don't buy, they know what you hover over, but don't click on, but don't buy. They know what leave in your cart, you offer a lot of data that can be potentially turned against you in pricing decisions, whether that's fewer discounts or higher prices.

13:05Lindsay Owens:And I think that a lot of people, they know that the trade-off is data privacy. If they sign up for a loyalty program, they say, okay, but I'm going to get 10 % or 15 % off, so who cares? So they know what I buy, whatever. But then if the company is using that data to actually price items higher, then you're not saving the money that you think you're saving. Yeah. Also, when you're in an app, you're in their user interface, their closed system. So you may not even realize that the prices that are being offered have been personalized or tailored to you. Another tip you have is to make sure you're comparison shopping and not just in the way people might traditionally think about it?

13:49Yeah, look, I think they're running all these experiments on us. And of course, one way to try to, you know, find a better price is to kind of turn the experiment back on them, right? And you and I log on at the same time together and see who gets the better deal. And then you buy it and I Venmo you for my share. Or you sit down with your roommate on the couch, or you sit down with your husband on the couch, or you call your mom and you have her log in and try logging in versus not logging in. Try in the app versus on the website versus in the brick and mortar store versus through a third party broker.

14:19Updating how you think about comparison shopping and comparison shopping in a much more capacious and wide ranging way is the best sort of individual consumer advice because that allows you to get a snapshot of how stable the pricing is, which is a great outcome, right? Oh, it's the same in the app. It's the same in the store. It's the same on the website. My friend is getting the same price. the roll neck sweater from J.Crew is indeed$79.99. Great. I'm going to buy it today. Right? Yeah. Like that's your best outcome, right? Is like you're not being exposed to personalized pricing.

14:56Lindsay Owens:Takeaway three, make sure you're comparison shopping, especially for big purchases. Check the price of a product or service across multiple devices. Like if you're ordering a car through a rideshare app, ask your friends to check the price on their phones too. Or if you're buying a plane ticket or a product, Look at the website on your phone, on someone else's phone, on your laptop, while logged in, while not logged in, with and without incognito mode, and also with and without a VPN. I use a VPN when I shop online. I wonder, can you explain what it is for people who don't use one or who've never heard of it?

15:33So a VPN is a virtual private network. And what a VPN allows you to do is mask your location. So when you log on without a VPN, your IP address is giving the company or the retailer where you're doing your online shopping information about where you're logging on from. They often can also ascertain what you're logging on from. If it's an iPhone, if it's an Android, if it's a PC, if it's a Mac, right? But a VPN can mask some of that background information. And it can also allow you to set a preferred location. And so you could even run your kind of pricing experiments using your VPN where you change the location that you want to be sourced from.

16:18And that allows you to see if prices are varying by location. San Francisco Bay Area versus greater New York area, for example, or Nashville, Tennessee, my hometown, right, to see if you can get a more competitive price coming from a different space.

16:34Lindsay Owens:And then you also talked about clearing your cache and clearing cookies. What does that mean? Yeah. So the idea here is companies collect data while you browse online, right? And so they are basically absorbing a breadcrumb trail of your browsing history. And so one thing that you can do is you can clear that data so that a company doesn't have access to it and you're effectively starting as tabula rasa as you could imagine when you're browsing. And so, you know, for example, in the JetBlue example, you know, this guy had been looking into flights for a while, right? He was trying to go to a funeral.

17:16He was checking to see if the flight prices were going up or going down. You know, JetBlue knows that he has been researching flights for a while and they think, oh, this guy is really interested in getting to this destination, right? And the idea is if you can clear that data before you go on to make a purchase, then that data isn't available to the company to use against you in that way. You also talked about trying to stop being so predictable.

17:42Lindsay Owens:So like throwing them off the scent a little bit by switching brands or changing the times and places you shop or using cash sometimes or using a different credit card. How does this help? Yeah. So, you know, when we talked earlier about the types of data that's really useful for companies to have about you and thinking about pricing decisions, one of them, of course, is your purchase history and how likely you are to buy things, how much of a sure thing you are. And so I think when a company realizes that you're always going to buy milk on a Tuesday, you're always going to buy cinnamon rolls on Sunday, you're always going to buy your morning coffee at 8 a.m., your afternoon pick-me-up coffee at 3 p.m., they can get really comfortable with your purchase history and they can use it to ascertain how competitive their pricing needs to be or not.

18:34And so, you know, some of what I suggest is, you know, being a little less predictable is a way to kind of get back into the fold where a company might actually want to push you a discount again, for example, because they're not sure if you're going to be able to buy it at the higher price. They might want to bring you in at a lower price.

18:51Lindsay Owens:You talk about taking back some privacy. And that means basically going through your phone and being like, what permissions do these different apps have? And how can I limit the permissions as much as possible? Yeah, look, you decide in your app settings how much data you want to hand over to these companies in some cases, right? You can turn off location data. You can turn off other forms of tracking. You can turn off inter-app sharing, right? So one app isn't sharing data with another app, for example. So those are, I think, things that you can do to try to keep some of your privacy protected in the e-commerce setting and in the app setting in your phone.

19:31Lindsay Owens:takeaway four clear your browsing data routinely go through your devices and limit the permissions that you grant to apps ask yourself questions like does this app really need to know where i'm located also use a vpn and try setting it in different locations to check prices what about just shopping in person yeah instead of online shopping in person is a great one you will be subjected to less of the high-tech reinvention of the ripoff if you are shopping in person. If you shop local, your mom and pop small business is not running a super sophisticated algorithmic price fixing experiment on you, right?

20:10Like that's not happening. But a lot of these technologies are seeping into brick and mortar stores. And so there are a lot of new technologies in brick and mortar stores that are making pricing more unpredictable. Over the past couple of weeks, We've seen a lot of people filming TikToks at Walmart. And what they keep revealing is there are a lot of items at Walmart these days that don't have a price on it at all. You go to the clothing aisle and you pick something up. You've got a tag with a size and a brand. And you know it has a skew. You can take it up to the cashier, but it doesn't have a price.

20:48and the lack of transparency without a posted price creates a lot of uncertainty for people on a budget. The best example is electronic shelf labels are popping up everywhere in grocery stores, in large big box retailers, organic grocery stores like Sprouts. And so you are going to be subjected to more price variation and more unpredictable pricing throughout the grocery store. There are a lot of companies that are exploring integrations between the grocery cart and the electronic shelf label and your personal information, right? So your cart has a little computer on it. You sign in with your loyalty program and that integration allows for things like personalized pricing, even in a brick and mortar store.

21:35So I don't think brick and mortar stores are a panacea and I think they're increasingly starting to be subject to some of these same concerns that we see in e-commerce. But absolutely, you've got many better options with brick and mortar.

21:51Lindsay Owens:Takeaway five, shop in person, but keep in mind that personalized pricing is seeping into big retailers' stores too. If you don't see a price tag or if you see an electronic shelf label, know that you might be paying more than the person behind you. Small retailers, on the other hand, mom-and-pop stores, those are unlikely to be using high-tech, personalized pricing, at least for now. If it's a service you seek, try doing it the old-fashioned way. Get a cab instead of ordering an Uber. Or call up your local takeout restaurant, order food, and go pick it up instead of using a delivery app. What do you do personally?