00:00 Speaker A
Justin, thanks for being here. I read your report. Well, let's line it up. I'm guessing this has something to do with Instacart basically charging, or charging different prices to different people and different regions of the country for the same item, and that doesn't even take into account shipping costs.
00:25 Speaker B
Yes, that's right. We had heard some information about Instacart doing this kind of personalized, individual pricing. Well, what we did was we recruited a bunch of Consumer Reports members. Well, I sent them all to the exact same store. I said, “Go shopping at Denver Safeway, use Instacart, buy the same 20 items, and let's compare what you get at the end of the day.” Well, we were actually really surprised at the price difference for most products between consumers shopping at the exact same store, for the exact same item, at the exact same time.
01:14 Speaker A
And I wonder how prevalent this has been throughout history. I don't think we need AI to create algorithmic pricing that takes into account different prices here and there. Well, is there any precedent for this? What is the background there?
01:36 Speaker B
Yes, this has happened from time to time for a long time. I mean, Amazon famously got caught doing this with DVDs around 2000. Well, some people get 23.99, some people get 19.99. They were caught and embarrassed by it. They apologized saying this was wrong. Researchers have been looking for it ever since and have found several examples here and there. Um, but this is what surprised them to such an extent. So many people, for so many products, were charging 23% different prices for the same item. So some people might be getting Skippy for 2.99 yen, some might be paying 3.39 yen, and some might be paying 3.69 yen for the same thing.
02:26 Speaker A
Yes, that's a big difference. Well, let's talk about some of the companies involved here. First of all, Instacart says it's stopping this practice, but it nevertheless turns out that the targeted item is part of this investigation or part of the issue here. And Consumer Reports says a pricing experiment at Target says so. Target told Consumer Reports it had no business relationship with Instacart, but Instacart acknowledged lowering Target's published price and adding an additional amount in expenses. So, uh, what happened here?
03:07 Speaker B
Well, I think some of you were saying that you can intentionally leverage the software that Instacart provides to do this kind of personalized pricing. Um, but again, you can go to Instacart and make uh purchases through unaffiliated companies. Instacart will continue to have the ability to set your own prices. Well, in this case, Target said they were not involved. It was all Instacart's decision. Many of Instacart's clients say they don't do that and that they charge online users the same fees they charge in-store. And as you said, since everything was exposed last month, Instacart has said they're no longer allowing anyone to do this. Well, this is just one company, but as you say, AI is becoming more pervasive now and we may start to see this in more areas over time. That's why we will not only continue this type of research, but we will also work on potential legislation across the country to at least require transparency, but in some cases, maybe even ban it. Well, there should be only one price you can decide whether to pay or not.
04:32 Speaker A
Well, that's really interesting. And it may even be possible to return to the regulatory front lines. Talk about the big picture around personal data, monitoring prices, and some of the things you've discovered here and the trends that are being implemented.
04:47 Speaker B
Well, I mean people are definitely paying more and more attention to this. That's my concern as a consumer advocate. The more companies get to know us, the more they know we're willing to pay Skippy. They know I'm more demanding and more desperate. Well, they're going to charge me more than everyone else. Therefore, for each transaction, if the business receives all the value, the consumer receives less value. I think that's even worse for us all. Again, if a company is caught doing this, it will incur goodwill charges. I think Instacart's stock price is down 6-7%, and it hasn't recovered since the study came out. Ah, but you know, this kind of stuff is actually very hard to find. We had to do very long research, hire a lot of people, and make sure our methodology was correct. Um, again, more and more companies are trying to fly under the radar, um, and have more power over people, especially in concentrated industries where there's only one or two options. Therefore, they potentially have more capacity to try to extract relative surplus from trading again.
06:05 Speaker A
Well, I can understand how difficult it is to go to any lengths to collect this data. Well, I would like to return to the topic of regulations. You mentioned that it may be influencing regulations here. Well, please tell me how much.
06:27 Speaker B
Well, some laws have been introduced across the country. New York actually enacted a law this month or last month to disclose whether prices are changed by algorithms based on personal data. Well, we've also seen laws that prohibit a lot of personalized pricing. Um, I went pretty far in California last year, um, and I'm going to be brought back in this session. We've seen legislation introduced in the federal government as well. So I think we're going to see that in probably a dozen states this year. There is also the possibility of a federation. Well, you know, the Federal Trade Commission could get involved. I believe the Federal Trade Commission has stated that they are investigating this practice and have serious concerns about this.
07:22 Speaker A
We have one more moment here. Can you share any other price differences or things you've noticed here?
07:34 Speaker B
Yeah, I mean, one more thing, one more factor that could be concluded, geolocation, there's some talk that if you're close to a store, you're likely to get a much lower price at that store than if you're far away and hopeless. You know, there are instances where companies think you're from a wealthy city based on your IP address. You may see a higher price for a hotel room or other services than if you booked online from elsewhere or at the same specific hotel. In short, there is more and more data about us out there, and more and more ability to leverage it. People are always looking for extra margin. Well, as I say again and again, it makes sense as much as we do, I totally get it. But from a consumer perspective, they're just looking for some level of fairness, not trying to exploit information that I don't necessarily need to know more about how much I'm going to pay.
08:44 Speaker A
Okay, I'll leave it at that. Thank you so much for researching here and sharing your details with us. thank you.
08:52 Speaker B
thank you.
