What is Surveillance Pricing And Why Does The NDP Want To Ban It?
(Photo: iStock)
The NDP’s new federal leader wants Mark Carney to ban surveillance pricing in Canada.
Earlier this week, Avi Lewis held a press conference on Parliament Hill to outline his concerns about the “creepy” and “unfair” pricing practice that uses personal data to set individual prices for different consumers, and challenged Carney to implement a ban “before it becomes a predatory new normal in Canadian life.”
Lewis’s view squares with what many Canadians want, too.
Just over half of Canadians recently polled by Abacus Data believe the practice should be banned. While not everyone is in agreement, the poll indicates there is a strong appetite for some form of government regulation on the basis of fairness.
Canadians may already be familiar with prices that are determined by an algorithm. Commonly known as “dynamic pricing,” it’s when prices rise because of market factors. The most common example is when ride-share companies charge more for a ride because of external factors like rain, time of day or during an event.
That price surge is going to be experienced by everyone who orders an Uber on a rainy Saturday night after a Jays game, but surveillance pricing goes much further. It uses a vast data set to curate higher individual prices for services and products.
What’s different about surveillance pricing?
Surveillance pricing uses the personal data a store has about you and then tailors a price for a specific product, says DT Cochrane, a senior economist at the Canadian Labour Congress..
According to Canada’s Competition Bureau, that information can be gathered in a couple of different ways. Businesses can use an algorithm to monitor competitor prices and promotions to tailor pricing, they can use the information they gather on their customers through their transaction history or loyalty programs, or they can use a third-party data broker. There are about 60 companies that purport to provide that data to corporations in Canada, according to the Competition Bureau.
Surveillance pricing means an online retailer might be able to buy or use information about you to get you to pay more than your neighbour for the same thing, explains Cochrane.
“For example," he says, "if a popular online retailer knows you buy toys around the date that they have identified as your nephew’s birthday, then when you log onto that online retailer and start looking at toys, you’re going to see a price that’s tailored to you.”
Per CBC, that type of pricing is already taking place in the United States.
Instacart, the grocery delivery app, reportedly experimented with surveillance pricing, and as a result, some consumers paid more for the same items.
The company says it’s since ended the practice of what it calls "price tests."
Different prices for different people
Surveillance pricing is hard to wrap your head around as it departs from what most Canadians assume about the rules that govern the exchange of goods and services.
“Orthodox economic theory says that the price is supposed to emerge where supply and demand intersect and this will be the price that everyone is going to face,” Cochrane says.
Surveillance pricing topples that balance—and the assumption of fairness.
“At one time we knew that price that’s on the tag is the price that everyone faces,” says Cochrane.
It creates a powerful asymmetry between the consumer and corporations, too.
“The sellers in this case have all this information about us, and we don't even know what information they have,” he explains.
Cochrane believes it’s likely this practice is already being used in Canada.
On Wednesday, the NDP tabled a motion to ban the practice; it was voted down by MPs.
Unlike Manitoba, which is planning to ban surveillance pricing, Ontario Premier Doug Ford said he won't outlaw the practice.
Per Global News, AI Minister Evan Solomon said the government is “looking into” the issue but that it would be under the purview of the Competition Bureau.
The very best of Chatelaine straight to your inbox.
Flannery Dean is a writer based in Hamilton, Ont. She’s written for The Narwhal, the Globe and Mail and The Guardian.
