Use of personal data to ‘rip off’ online shoppers sparks inquiry

The government is launching an inquiry into the use of personal data to set individual prices for holidays, cars and household goods, amid rising fears of a consumer rip-off.

The research, supported by the competition watchdog, will explore the prevalence of “dynamic pricing” based on information gathered about an individual, such as location, marital status, birthday or travel history. With about 17% of retail sales now made online, according to the Office for National Statistics, there is rising concern about the use of technology, including artificial intelligence and bots, to “personalise” prices, to the disadvantage of some shoppers.

It has become common for online prices to fluctuate depending on time of day or availability – whether for gig tickets or Uber taxis. Now digital labels have begun to appear in shops, offering the potential to bring “surge pricing” into analogue sales.

Andrea Coscelli, chief executive of the Competition and Markets Authority (CMA), said: “With more of us shopping online, it’s important we understand how advances in technology impact consumers … so we can understand how best to protect people from unfair practices where they exist. We will also use the results in our ongoing efforts to help vulnerable consumers.”

The issue was raised at a meeting last week of the new Consumer Forum, which brought together watchdogs, including the CMA, Ofcom, Ofgem and the Civil Aviation Authority, with consumer minister Kelly Tolhurst. The chancellor, Philip Hammond, has asked a panel of experts led by Jason Furman, a former adviser to Barack Obama, to examine competition in the digital economy, including how machine learning and algorithms are used to set prices and whether firms could gang up to disadvantage consumers. The group’s call for evidence also says it wants to learn more about how consumers pay for “free” services by handing over their data.

Business secretary Greg Clark said: “UK businesses are leading the way in harnessing new technologies … But companies should not abuse this technology and data to treat consumers, particularly vulnerable ones, unfairly.”