UK to probe fairness of personalized pricing practices in online retail

The UK government has announced an investigation into personalized pricing practices in online retail following growing concerns that vulnerable consumers are at risk of price discrimination through the use of ecommerce technologies that vary prices for products such as cars, holidays and household goods via the use of personal data points.

The Competition Markets Authority (CMA) will also be involved in the research, which was announced yesterday.

The government-commissioned research is intended to investigate how widespread the practice of personalized online pricing is; how businesses are applying it through different mediums like search engines, apps or comparison tools; and the extent to which it is preventing shoppers getting the best deals, the CMA said.

Commenting in a statement, business secretary Greg Clark said: “UK businesses are leading the way in harnessing the power of new technologies and new ways of doing business, benefitting consumers and helping them save money. But we are clear that companies should not be abusing this technology and customer data to treat consumers, particularly vulnerable ones, unfairly.

“The research we are undertaking will help us better understand how we can ensure businesses work in a way that is fair to consumers.”

“Ensuring markets work fairly and in the interests of consumers is a cornerstone of our modern Industrial Strategy, and I am proud to say that our consumer protection regime is among the strongest in the world,” he added.

In another supporting statement, CMA chief executive, Andrea Coscelli, added: “With more of us shopping online, it’s important that we understand how advances in technology impact consumers. This personalised pricing research will help us stay at the forefront of emerging technology, so we can understand how best to protect people from unfair practices where they exist. We will also use the results of the research as part of our ongoing efforts to help vulnerable consumers.”

In September, UK consumer advice charity Citizens Advice filed a super complaint to the CMA calling for it to tackle the loyalty penalty in essential markets such as mortgages and mobiles which it said it resulting in excessive prices being charged to disengaged consumers.

The UK’s Financial Conduct Authority (FCA) has also announced it will be investigating personalised pricing for car and home insurance policies — after finding hidden discrimination between customers.

At the end of last month the FCA said its initial work had identified a number of areas of potential consumer harm — announcing a market study to take a closer look at the outcomes from general insurance pricing practices and make a determination on whether and if so how it should intervene to improve the market.

That market study is focused on: the consumer outcomes from pricing practices; the fairness of outcomes from pricing practices; the impact of pricing practices on competition; and remedies to address any harm that the FCA finds.