How personal data is being used to control what customers see and pay

0:00You can learn a lot about someone from how they spend their money. Amazon keeps close tabs on the spending habits of its customers, and now the company is sharing what they think they know. There is a new feature called About You, where shoppers can find a long list of insights that the company has developed based on your browsing habits, purchase history, and even conversations with Alexa. And it can get pretty personal. One woman posted on social media that Amazon had surmised that she has a, quote, flat buttocks. Ouch. Lindsay Owens studies how and why companies collect data on their customers. She is the president and CEO of the nonprofit economic think tank groundwork collaborative, and the author of a book called Gouge. The end of a fair price, and what that means for your wallet. Hi, thanks for joining us. Thanks so much for having me. OK, and a quick note before we go any further, Amazon is a financial supporter of NPR and pays to distribute some of our content. All right, let's jump in together here and see what Amazon knows about us.

1:01Shall we? Let's do it. Let me open up this About You feature on my phone. So Amazon has like 44 total entries on this list. They know that I prefer Locke Lomb for coffee, as true. They think that I prefer Van Luehn for premium ice cream. I am not totally sure if that's accurate. What about you? What's standing out to you from your list? Yeah, they've definitely got my number in some respects. They know I live in Washington, DC, which is true. They have a surprising amount of information about my son. Here it says I have a preschooler who is around three years old. My son turned three in August, so that's pretty close. Yeah, there's a lot of stuff about my family situation as well. I mean, yeah, they think that I have a 13-year-old child. And in fact, I have a 12-year-old who's going to be 13 next month. Yeah, that's pretty close. So what exactly is Amazon up to here?

2:01What are they trying to do? Yeah, look, companies these days can collect a really incredible amount of information about you as a consumer. Some of this is good news for consumers at points. You can get better product recommendations. But the concern, of course, is how this data can be turned against you in pricing decisions, for example. And whether or not this data can lead to more personalized pricing where you might get charged more than me for the same item because you have a history of buying it in the past. Do we have any idea why Amazon would be choosing to make this information available for us to see for ourselves? Like, why share it with us? Yeah, it's an interesting question. And you do have the ability to make changes. If you click on one of your categories, it says, if something doesn't look right, share some feedback to help us make corrections or updates. So I think really what they're looking for is, in part,

3:04your participation in improving their algorithm and in ultimately getting you to spend more of your money on the Amazon website. They're putting us to work, in other words, to make their algorithm better. Absolutely, not just using and selling our data, but also making sure we're in on it as well. This kind of profile building is not uncommon, right? I mean, your work has focused on one reason that this data is collected, which is called surveillance pricing. Explain what that means. Yeah, surveillance pricing is a colloquial term for something that economists call personalized pricing, which is a way of setting pricing based on your individual willingness to pay. I think for most Americans, it's pretty horrifying because it really sits at the intersection of two things we hate, being spied on and being ripped off or overcharged. Companies are increasingly collecting vast data on you

4:09to better assess how much they can charge you. When will they need to push you a discount or offer you a better price to get you to finish the purchase? When can they not bother with the discount because they know you'll pay full freight? Or maybe they know you're desperate to buy it. They know I've got a three year old. If I'm searching for children's Tylenol, I've probably got a sick three year old. They know that I might be willing to pay top dollar to get that fever broken. So increasingly, this corporate surveillance state is not just a privacy concern, it's also a pocketbook concern. How widespread do you think this surveillance pricing is? I mean, you've given a couple of examples, but are they still isolated? Do you think this is becoming really common? Yeah, it's a little tough to know because companies obviously take great pains to keep a lot of this from us, which is, in part, what makes Amazon's about me page so unusual. But we've seen examples of Expedia charging customers more

5:11for a hotel room in New York if they were logging on from a wealthier area. We've seen examples of target increasing prices in the app as they know you approach the store and are likely to go in and make the final purchase. We know through our analysis of Walmart's patents that they have built the technology and patented the technology to change the price of mayonnaise once they know you have tuna in your cart. They have said that they're not planning to deploy that patent, but clearly the technology is there, it's being built, and it's not just online anymore as increasingly folks purchase items in app, use Scan and Go technologies, or even use smart carts in grocery stores. What are you most concerned about when you see all of this technology around the shopping experience? Where do you think we're headed? I'm most concerned about the extinction of a fair price in this country.

6:12For 150 years, we've had a price tag. We moved past a period of haggling where different people were charged different amounts for the same item, and we got a standard posted price. It heralded in a period in our economy where we had a little predictability in shopping, where we had transparency, which facilitated comparison of the shopping, the key mechanism that keeps pricing competitive. And I worry that the changes that companies are making to pricing is going to erode competition and make us all poorer to boot. I've been speaking to Lindsay Owens. She is the president and CEO of Groundwork Collaborative and the author of Gouge, the end of a fair price, and what that means for your wallet. Thank you so much for joining us. Thanks for having me.