Price discrimination based on tracking of Internet Protocol (IP) addresses – numerical identifiers assigned to devices that are connected to the Internet – was in the news again this week after a Belgian Member of the European Parliament (MEP), Marc Tarabella, called for action from the European Commission to investigate the practice. In January, French newspaper Le Monde wrote about online price discrimination by transport companies based on IP addresses, which supposedly occurs when consumers make repeated searches from a device with the same IP address, leading to the website to offer a higher price on each successive search. EU Justice Commissioner Viviane Reding responded to questions raised by MEPs at the time to say that customers should be informed about such activities under EU data protection law, and that responsibility for the issue lies with national data protection supervisory authorities.
Mr. Tarabella said this week that he has also become aware of companies tracking consumer visits to other websites based on their IP address, and adjusting the prices they offer depending on the types of websites the consumer visits. Mr. Tarabella called for action from both the Commission and the Belgian authorities. The French data protection authority, the CNIL, has already launched an investigation into the topic.
Anecdotal evidence of companies, particularly low-cost airlines, raising prices when a consumer makes repeated searches has circulated for years. The UK Office of Fair Trading published its own report into the issue in May of this year. The report found no evidence that businesses were using information about individuals to set higher prices for them. “Rather,” the report explained, “businesses are offering personalised discounts, and increasingly using information collected about consumers in order to refine their pricing strategies. For example a business may use information collected about consumers to identify consumers who have not made a purchase for a number of weeks and offer a discount on future purchases.” The Office of Fair Trading, however, indicated that it would keep the area under review as it received limited responses from businesses and it was clear that technology to increase prices based on the web browsing or purchasing habits of particular individuals did exist. It will be interesting to see whether the CNIL reaches the same conclusion.