Core Insights - Loyalty programs are shifting from rewarding customers to employing "surveillance pricing," which may penalize loyal consumers instead of benefiting them [1][5] Group 1: Surveillance Pricing - The concept of "surveillance pricing" involves collecting extensive consumer data to create individualized pricing, which can lead to different prices for the same product based on customer behavior [3][5] - A report by the FTC indicates that factors such as location and browsing history can influence pricing strategies, raising concerns about fairness in loyalty programs [3][5] Group 2: Customer Experience - A technology columnist's experience with Starbucks revealed that frequent visits resulted in fewer promotions, suggesting that loyal customers may not receive the best deals [2][4] - Starbucks utilizes an AI tool named Deep Brew to analyze customer data, which may lead to assumptions that frequent customers will pay full price, resulting in unequal pricing for similar products [4] Group 3: Industry Implications - Former FTC officials warn that loyalty programs are becoming "backdoor laboratories for pricing," using large datasets to infer customer characteristics and tailor discounts accordingly [5]

Core Insights - Instacart has been utilizing a practice known as surveillance pricing, which involves charging different prices for identical items based on customer data, a method that has roots in its 2022 acquisition of Eversight, an AI pricing company [1][6][8] - A recent investigation revealed that prices for the same grocery items on Instacart can vary by up to 23% between different customers, indicating a significant level of price discrimination [3][6][12] - The pricing strategy employed by Instacart is likened to dynamic pricing models used in other industries, raising concerns about the fairness and transparency of pricing for essential goods [2][16] Pricing Variability - Consumer Reports and Groundwork Collaborative found that 75% of products had different prices for each user, with an average shopping basket showing a price variation of about 7%, potentially costing families around $1,200 annually [1][6] - Personal experiences from users indicate that price fluctuations can be substantial, with items like bacon and butter showing price differences of 19% and 52% respectively [10][11] - Instacart's pricing changes are not always aligned with typical grocery inflation, which was reported at about 2.7% over the past year, suggesting that the variability is driven by algorithmic pricing rather than market conditions [12] Algorithmic Pricing Practices - Instacart's algorithms are designed to set individualized prices based on customer data, often without the customer's knowledge, leading to a lack of transparency in pricing [6][8] - Despite claims from Instacart that their pricing tests are randomized and not based on personal characteristics, disclosures in New York indicate that personal data is indeed used to calculate fees [8][9] - The company has faced scrutiny and has temporarily halted pricing experiments at certain retailers following the investigation, although it has not fully acknowledged the extent of its algorithmic pricing practices [7][8] Legislative Response - In response to the findings, lawmakers are considering legislation to ban surveillance pricing, with the "One Fair Price Act" introduced to prevent companies from charging different prices based on personal data [16][17] - Other states, including California, Colorado, and Pennsylvania, are also exploring similar measures to protect consumers from price discrimination practices [17]

The prices you pay for goods online may be determined by your browsing history, zip code, and more. Learn how surveillance pricing works. https://t.co/vLeZQ6qjsj ...