Forum Post: Shopper Cards and Individualized Price Gouging

See http://www.nytimes.com/2012/08/10/business/supermarkets-try-customizing-prices-for-shoppers.html?pagewanted=all (for now this link seems to work, but if it turns "subscriber only" at some point, just type it into Google and click on the Times result and you should still get in)

Now many of us have been adamantly against privacy-invasive shopper card schemes from the beginning (see www.caspian.org). But with the programs reported here, the problems go from being hypothetical to being immediate. The NYT article details programs by which stores are giving individual shoppers DIFFERENT PRICES based on the shopping card history. Example: "creating specific offers and prices, based on shoppers’ behaviors, that could encourage them to spend more: a bigger box of Tide and bologna if the retailer’s data suggests a shopper has a large family, for example (and expensive bologna if the data indicates the shopper is not greatly price-conscious)."

Now I assume there are a very small number of boundaries the stores won't cross. I suppose they will disclaim all responsibility should some Fuzzy Zoeller among their ranks decides to give black shoppers a discount (or a price increase?) on collard greens. But there's no guarantee that their discrimination would not affect people based on political party registration or their known opinions, for example. In any case, I don't think that even that is the worst of it.

The real problem I see is that I think they will invent a "Tantalus paradigm" for deceiving consumers and defeating competition. If one of their Loyal Customers never buys the cheap brand of peanut butter, it will always be very cheap to him. He will assume he's paying a high price for his brand because it is top quality. When he goes to the next market over (which has bought his personal information) it will be the most expensive brand there also. But if he ever bought the cheap brand, soon it wouldn't be so cheap any more - and he might be surprised to learn that his neighbor, who prefers the other brand, thinks that that's the high quality, expensive brand.

Someone whose name I really should remember wrote that "Capitalism is fair the way a fight between Christians and the lions in an arena is fair". When consumers give up their privacy, and give their adversaries detailed intelligence on their habits and preferences, the fight is less fair than ever.