Target’s Pricing Algorithm Raises Data Privacy Concerns in New York
Target’s pricing strategy has come under scrutiny after discrepancies were noted in egg prices, varying significantly based on geographic location. In Rochester, New York, a carton of Target’s Good & Gather eggs is priced at $1.99, while the same product costs $2.29 in Manhattan’s affluent Tribeca neighborhood. This uneven pricing has prompted speculation regarding its origins, particularly as Target recently added a disclaimer on its website stating that the prices are determined by an algorithm utilizing customer data.
New York State’s recently enacted legislation mandates that companies employing algorithms for pricing based on personal consumer data must disclose such practices. The law defines personal data broadly, encompassing any information that can be reasonably linked to an individual or device. However, the legislation does not require businesses to detail what specific data points are considered or the manner in which they influence pricing. Notably, the law allows location data usage strictly for cab fare calculations, excluding other applications.
The clarity of this disclosure is questionable; to access the information, customers must interact with an “info” icon adjacent to pricing, navigating through a pop-up—an approach criticized for potentially obscuring important information. Historical court rulings indicate that it may be unreasonable to expect consumers to frequently click on supplemental information links, raising concerns about compliance with the “clear and conspicuous” standard outlined in the law.
Despite numerous inquiries, Target has not clarified the reasons behind the price variations or provided specifics about the personal data leveraged in its pricing model. This is not the first instance of Target using location-based pricing; a 2021 inquiry by the Huffington Post revealed that the company’s online prices adjust according to the store location associated with the user’s account, a practice described by Target representatives as reflective of local market conditions. Additionally, in 2022, Target settled a lawsuit involving claims of using geofencing to modify prices displayed to customers based on their geographic location.
Current practices still link website visitors to nearby physical Target stores, which can be modified in settings, although the criteria for automatic store association remain unclear. This ongoing adaptation of pricing based on user proximity extends beyond eggs; for instance, customers associated with a store in Flushing, Queens, see a six-pack of Mega Charmin Ultra Strong Septic-Safe Toilet Paper listed at $8.69, while those linked to the Tribeca location face a price of $8.99 for the identical product.
Businesses must consider the implications of algorithm-driven pricing in the wake of such developments. The use of personal data to dynamically adjust prices could expose companies to regulatory scrutiny and potentially weaken consumer trust. Understanding the tactics employed—such as initial access through data collection methods and maintaining persistence through continuous tracking—is essential for companies navigating the risks associated with artificial intelligence and machine learning in retail environments.
As technological advancements continue to evolve consumer interactions with businesses, organizations must prioritize transparent data practices to bolster customer confidence and ensure compliance with emerging legal standards.
