Survey: Online travelers naive about prices

June 01, 2005 |

More than two-thirds of people surveyed said they believed online travel sites are required by law to offer the lowest airline prices possible.

Most American consumers don’t realize Internet merchants and even traditional retailers sometimes charge different prices to different customers for the same products, according to a new survey.

The study, “Open to Exploitation,” found nearly two-thirds of adult Internet users believed incorrectly it was illegal to charge different people different prices, a practice retailers call “price customization.” More than two-thirds of people surveyed also said they believed online travel sites are required by law to offer the lowest airline prices possible.

The study by the Annenberg Public Policy Center of the University of Pennsylvania is the latest to cast doubt on the notion of sophisticated consumers in the digital age.

It said 87 percent of people strongly objected to the practice of online stores charging people different prices for the same products based on information collected about their shopping habits.

“I don’t think people understand this is being done,” said Willi Stabenau, 23, a musician in New York who participated in the survey. “We don’t let ourselves be tracked that way in any other facet of our lives. Why would you want that to happen while you’re shopping?”

The Internet empowers careful shoppers to conveniently compare prices and features across thousands of stores. But it also enables businesses to quietly collect detailed records about a customer’s behavior and preferences and set prices accordingly. Changing prices is generally lawful unless doing so discriminates against a consumer’s race or gender or violates antitrust or price-fixing laws.

Stores aggressively try to retain loyal customers who generate the highest sales while discouraging bargain-hunter shoppers who are less profitable and are known within the industry as “bottom feeders.”

“It’s really murky because companies are so loathe to discuss this,” said researcher Joseph Turow. “This is a new model of shopping reality. The question becomes, what do people feel is right? Can’t more openness be the order of the day?”

The study urged government to require retailers to disclose exactly what information is collected about customers and how the data is used, and it urged schools to teach students better how to protect themselves as consumers.

The Annenberg study was based on results from a telephone survey from Feb. 8 to March 14 of 1,500 adults who said they had used the Internet within the past 30 days. The margin of sampling error was reported to be plus or minus 2.51 percentage points.