On 4 November 2018, the Government, supported by the Competition and Markets Authority (CMA), commissioned research into the increasing trend of retailers using advances in technology combined with customer personal data to create “personalised pricing” strategies, meaning that different people are charged different prices for the same item.

This approach of targeting shoppers whilst they browse and shop online involves the retailer analysing the journey that the customer has taken with their online shop, such as how much time the customer spends searching for the same product, and the retailer then changes the price of their product depending on observations they have made about that journey. The retailers use customers’ personal data including their address, marital status, birthday and travel history and technology such as search engines, comparison tools and apps in order to personalise their prices to that individual customer. This personalised pricing can be used on anything from holidays to cars to household items.

The research will look into how widespread this issue is and to what extent shoppers are being prevented from getting the best deal for items due to personalised pricing. It will also look at whether and how customers’ personal data is used in personalised pricing and how retailers use technology to enable them to carry out this practice. The hope is that the research will facilitate protections being put in place to protect vulnerable consumers and prevent retailers from using technological advances to enable unfair practices. Business Secretary Greg Clark reinforced this opinion, saying “…companies should not be abusing this technology and customer data to treat customers, particularly vulnerable ones, unfairly.”

This issue is closely linked to a super-complaint raised recently by Citizen’s Advice to the CMA regarding the “loyalty penalty”, where customers who stay with the same provider (typically broadband, energy or insurance) and do not shop around for introductory offers often pay far more than new customers do. The issue of vulnerable customers in regulated markets such as the insurance and banking industry has previously been raised by the National Audit Office in 2017.

Both of these issues were raised at the first meeting of the Consumer Forum, which is made up of CEOs from sector regulators, such as the CMA, Ofcom, Ofgem and the Financial Conduct Authority, and government ministers, and which it is hoped will play a vital part in coordinating action to help consumers.

It remains to be seen whether this issue will result in any changes in current legislation or new legislation being drafted, however it would be interesting to see what conclusions are reached from the research. We will keep you updated.

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