TELECOM Digest OnLine - Sorted: Retailers Tailor Prices to Personal Web Data -- Study

Retailers Tailor Prices to Personal Web Data -- Study

Lisa Minter (
Wed, 1 Jun 2005 23:43:19 -0500

By Jon Hurdle

PHILADELPHIA (Reuters) - U.S. shoppers may be paying different prices
for the same goods because of information gleaned from the Internet
about individual buying habits, according to a survey released on

Internet shoppers in particular are vulnerable to "behavioral
targeting," in which retailers collect information about what they
shop for and how often they do it, and adjust their prices
accordingly, said the survey from the Annenberg Public Policy Center
at the University of Pennsylvania.

Retailers often use the data to reward frequent buyers with lower
prices, a practice of which many consumers are unaware.

Online stores identify individuals by inviting them to sign in with a
password and requiring information such as birth date and ZIP code,
said the report, titled "Open to Exploitation."

Online retailers can watch and record what products a shopper looks at
and whether they started to buy something but did not complete the

"The study's findings suggest ... most Internet-using adult American
shoppers are open to financial exploitation by retailers," according
to authors Joseph Turow, Lauren Feldman and Kimberly Meltzer.

They warned the trend could become more common as retailers gather
more information about consumers' habits.

"Database-driven price distinctions could spread as growing numbers of
retailers use information consumers never knew they revealed to draw
detailed conclusions about their buying patterns that they would never
have wanted," the report said.

Scott Krugman, a spokesman for the National Retail Federation, said
the practice was just good business.

"In today's competitive environment retailers are going to do whatever
they can to keep their loyal customers," he said, adding, "There will
be better pricing" for repeat customers.

The Annenberg study found that almost two-thirds of the national
sample of 1,500 participants did not know online stores can legally
charge different people different prices. A higher proportion - 71
percent -- did not know that traditional retailers are also entitled to
do the same thing.

Consumers also were largely unaware of how their names were shared,
the study found.

More than 7 out of 10 did not know charities are allowed to sell
consumers' names to other charities without permission, and some
two-thirds were unaware that supermarkets are allowed to sell
information about what they buy to other companies.

Three-quarters believed, incorrectly, that a Web site's privacy policy
prevents it from sharing information.

The report recommended schools integrate consumer education and media
literacy to make young people aware of such practices and it called on
government to require retailers to disclose what information they
collect and how they use it.

Copyright 2005 Reuters Limited.

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