By Jon Hurdle
PHILADELPHIA (Reuters) - U.S. shoppers may be paying different prices for the same goods because of information gleaned from the Internet about individual buying habits, according to a survey released on Wednesday.
Internet shoppers in particular are vulnerable to "behavioral targeting," in which retailers collect information about what they shop for and how often they do it, and adjust their prices accordingly, said the survey from the Annenberg Public Policy Center at the University of Pennsylvania.
Retailers often use the data to reward frequent buyers with lower prices, a practice of which many consumers are unaware.
Online stores identify individuals by inviting them to sign in with a password and requiring information such as birth date and ZIP code, said the report, titled "Open to Exploitation."
Online retailers can watch and record what products a shopper looks at and whether they started to buy something but did not complete the purchase.
"The study's findings suggest ... most Internet-using adult American shoppers are open to financial exploitation by retailers," according to authors Joseph Turow, Lauren Feldman and Kimberly Meltzer.
They warned the trend could become more common as retailers gather more information about consumers' habits.
"Database-driven price distinctions could spread as growing numbers of retailers use information consumers never knew they revealed to draw detailed conclusions about their buying patterns that they would never have wanted," the report said.
Scott Krugman, a spokesman for the National Retail Federation, said the practice was just good business.
"In today's competitive environment retailers are going to do whatever they can to keep their loyal customers," he said, adding, "There will be better pricing" for repeat customers.
The Annenberg study found that almost two-thirds of the national sample of 1,500 participants did not know online stores can legally charge different people different prices. A higher proportion - 71 percent -- did not know that traditional retailers are also entitled to do the same thing.
Consumers also were largely unaware of how their names were shared, the study found.
More than 7 out of 10 did not know charities are allowed to sell consumers' names to other charities without permission, and some two-thirds were unaware that supermarkets are allowed to sell information about what they buy to other companies.
Three-quarters believed, incorrectly, that a Web site's privacy policy prevents it from sharing information.
The report recommended schools integrate consumer education and media literacy to make young people aware of such practices and it called on government to require retailers to disclose what information they collect and how they use it.
Copyright 2005 Reuters Limited.
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