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IPFS News Link • Business/ Commerce

The scary new ways you're about to get overcharged for everything

•, by Albert Fox Cahn

I knew what I had paid for my seat, how many miles I had used for the indulgence of an upgrade. But I had no idea if the woman across the aisle had spent only a few points, as I had, or paid the more than $10,000 the airline could charge for the same trip. To book a flight has long been to play a game where only the airline knows the rules, with countless booking codes, loyalty programs, and fare changes that weaponize your data against your wallet. But after I landed, I kept seeing the same rigged game everywhere: in every Uber ride, every Amazon order, every trip to the supermarket. All these businesses now know so much about me that they can see a number blinking above my head: the exact price I'd be willing to pay in a given moment. Your own number is blinking above your head right now.

In the algorithmic age, pricing variability is increasingly creeping into digital commerce, with charges going up and down in real time.

What's far more disturbing is the rise of personalized pricing, digital retailers' practice of exploiting your own data to charge the precise price you're willing to pay, which might be different from what the guy next to you would pay. Personalized pricing not only bakes in bias and can drive inflation but creates a world where you never know when your apps are ripping you off.

Now, when I'm on the verge of paying for anything on my phone or laptop, I second-guess whether I'd be paying less if I were using someone else's account.

I still remember the low-grade shock I felt a decade ago when I learned that price discrimination is often perfectly legal in the United States. In law school, my antitrust professor introduced us to the obscure Depression-era Robinson-Patman Antidiscrimination Act by quickly highlighting that this law very much failed to live up to its title. Under the long-standing law, companies can face ruinous penalties for price discrimination only if they're discriminating against other businesses. If a wholesaler overcharged a store, the store could take it to court, but there was nothing then (or now) to stop the store from doing the same thing to its customers. That is, store owners have more price protections than their customers. If a store generally charges some customers more than others because of their gender, race, or other legally protected characteristics, that's certainly illegal. But when companies want to shake down each customer for the most they're individually willing to pay, they're free to engage in highway robbery.