Imagine going for an oil change and finding out that the auto shop charged you a higher price just because you had a luxury car, so they figured you could afford it. You’d probably get ticked off and find another mechanic, right? According to the Wall Street Journal, travel website Orbitz.com has begun engaging in an online version of this, showing more expensive hotel offers to people accessing the site from Macintosh computers — a group of customers that spend as much as 30% more on their hotel rooms, according to the company’s research.
Americans have a troubling tendency to turn over all sorts of personal information to just about any website that dangles a coupon code in front of us. We don’t mind companies harvesting our personal data, then slicing and dicing it in order to sell us stuff. But what about when companies use those seemingly small details to charge us more for the same goods and services? Will this be the moment when it starts to dawn on us that we should probably be less cavalier about what we expose online?
The Journal reports that Orbitz’s experiment is in its early stages. It quotes a company executive who says the site won’t show the exact same room two different customers at different prices, but that’s little consolation. A Mac user searching for a place to stay who gets information about an upgraded room or suite probably believes it’s all that’s available for their travel dates. Meanwhile, a Windows user might conduct the same search and get back results for less expensive standard rooms. Orbitz tells the Journal that Mac customers book the pricier hotel rooms anyway. But shouldn’t it be up to the consumer, not Orbitz, to decide to save a few bucks on a particular trip and slum it in a cheaper room.
Dynamic pricing, to use the industry buzzword, is nothing new. Airlines as well as hotels have adjusted their rates for years based on supply and demand, which is why it’s cheaper to visit Phoenix in August or the Jersey Shore in February. There’s nothing inherently wrong with this, although Coca-Cola’s tests in the late 90s of vending machines that charged more when the temperature crept up generated a consumer backlash that prompted the company to abandon the idea.
The difference here is one of transparency. Travelers shouldn’t be led to believe that they’re getting the best deal out there when, in reality, they’re only receiving the best deal that the company extended to them based on who they, are what they own or where they shop.
To a large degree, companies already have this information, thanks to our willingness to fork it over and a few technology companies creating surprisingly accurate composite pictures of who we are.
In the New York Times two weeks ago, there was a fascinating and slightly creepy article about the company called Axiom. This under-the-radar business in suburban Arkansas has 23,000 servers dedicated to warehousing and storing information about all of us. Its in-house classification system places people into one of 70 detailed subcategories based on their behaviors.
The article focuses on the most common use of such data, such as sending targeted coupons and the like to consumers based on their browsing habits. But as the Orbitz example shows, that’s not the only way this information can be utilized. There’s a fine line between prompting consumers to buy something they might otherwise not have purchased by dangling a discount in front of them, on one hand, and singling out a subgroup for the sole purpose of pitching them more expensive items on the other.
And when this sort of personal data is deployed to predict risk, that’s when things get really dicey. A recent study to mine social networks like Facebook for user data bankrolled by Germany’s largest credit reporting agency was dropped after a public outcry, but privacy experts and credit industry analysts say it’s only a matter of time before American companies start pushing this envelope.
Obviously, you’re not going to run out and buy a different computer just so you can get a better hotel deals on Orbitz (especially because rival travel websites Expedia.com and Travelocity.com tell the Wall Street Journal they don’t alter their results for Mac users), but this should serve as a wake-up call to the increasingly detailed and invasive degree to which companies are going to get us to spend more, sometimes without our even knowing it.