If you’re near Rochester, New York, the price for a carton of Target’s Good & Gather eggs is listed as $1.99 on its website. If you’re in Manhattan’s upscale Tribeca neighborhood, that price changes to $2.29. It’s unclear why the prices differ, but a new notice on Target’s website offers a potential hint: “This price was set by an algorithm using your personal data.”
A recently enacted New York State law requires businesses that algorithmically set prices using customers’ personal data to disclose that. According to the law, personal data includes any data that can be “linked or reasonably linked, directly or indirectly, with a specific consumer or device.” The law doesn’t require businesses to explicitly state what information about a person or device is being used or how each piece of information affects the final price a customer sees. The law includes a carve-out for the use of location data strictly to calculate cab or rideshare fares based on mileage and trip duration but not for other purposes.
The law also requires that the disclosure is “clear and conspicuous.” Target’s disclosure is not the easiest to find–a customer would have to know to click the “i” icon next to the price of an item, then scroll to the bottom of the pop-up. In the past, the courts have held that it’s not always reasonable to assume that a customer will click on “more information” links when it’s not required.
Target didn’t respond to questions about the price differences or explain what personal data was used per the disclosures.
For years, Target has had a practice of setting different prices for different locations. In 2021, the Huffington Post found that Target’s website changed prices depending on the store location associated with a user, and a spokesperson for the company told reporters at the time that its online prices “reflect the local market.” In 2022, the company settled a lawsuit filed by multiple California county district attorneys that alleged it used geofencing to automatically update the prices listed in customers’ Target apps. Today, when you visit Target’s website, it still automatically associates you with a nearby store, which you can change in the website’s settings. (Target didn’t respond to questions about how it decided which brick-and-mortar store to automatically associate with a website visitor.)
In addition to eggs, the price of toilet paper also appears to change based on what store a customer is associated with. For those whose store is set in Flushing, Queens, a six-pack of Mega Charmin Ultra Strong Septic-Safe Toilet Paper is $8.69. Those with the Tribeca location are shown $8.99 for the same listing.
Target’s pricing practices aren’t unique or all that new—nor are they illegal. In 2012, The Wall Street Journal reported that office supply retailer Staples was displaying different prices to customers on its website after estimating their location. At the time, Staples acknowledged the practice, telling the Journal that its prices “do vary by geography due to a variety of factors, including rent, labor, distribution, and other costs of doing business.” In 2015, ProPublica found that the Princeton Review’s online SAT tutoring packages sometimes varied by thousands of dollars based on the zip code provided by customers. Similar to Staples, the Princeton Review told ProPublica that its pricing was based on the “costs of running our business and the competitive attributes of the given market.”
Last year, the Federal Trade Commission initiated a market study on what it called “surveillance pricing,” which it said included using a customer’s location to help set prices. The agency published an interim report in January but has yet to release a final report. (I was previously employed by the FTC; Target was not included in the market study.)
Beyond eggs and toilet paper, it’s not clear what else retailers are pricing algorithmically (or how). The disclosures could potentially shed some light on the variety of goods customers pay different prices for, even if it doesn’t necessarily help consumers understand why. The New York law might be followed by similar legislation in other states—at least one other state, Pennsylvania, introduced a similar bill earlier this year—and a federal bill addressing surveillance pricing was introduced in July. There’s broader regulatory interest in the ways that AI and algorithms can influence consumer pricing: According to JD Supra, over 50 bills related to algorithmic pricing, including those related to algorithmic price-fixing and the use of certain characteristics in dynamic pricing algorithms, have been introduced at the state level across the United States.
Meanwhile, Target has been exploring other high-tech efforts. It recently announced that it is launching a Target app in OpenAI’s ChatGPT, where consumers will be able to lean on the chatbot for personalized shopping recommendations.
The post Your Data Might Determine How Much You Pay for Eggs appeared first on Wired.
