How Online Retailers Trick Shoppers Into Paying More

1. Your online profile could boost the price.

Online re­tailers know all kinds of things about you from the electronic bread crumbs you drop, such as your IP address, and they capitalize on it using price discrimination or differential pricing. For example, a site may charge higher prices after taking note of the Web browser you’re using, your location, your previous shopping habits, or your search history. Or the merchant may steer your search—arranging the results to guide you toward more-expensive items. If a travel site sees that you’re using a MacBook Air or an iPad, say, rather than a Windows desktop, it may show you a pricier selection of hotel rooms.

See Our Slide Show: 10 Online Shopping Traps That Catch Even Smart Shoppers

2. Everybody’s doing it.

A recent study by Northeastern University found that several leading Web commerce sites practiced steering and price discrimination. For example, Cheap Tickets and Orbitz quoted lower prices for users who logged in than for those who didn’t log in—an average of $12 a night less for about 5% of hotels. Expedia and Hotels.com steered a segment of customers toward their more-expensive hotels. Searches of Travelocity’s and Home Depot’s Web sites using certain mobile devices yielded different results and pricing. And Priceline changed search results based on a user’s history of clicks and purchases.

3. It’s legal.

Although it may seem unfair, retailers aren’t breaking laws when they employ differential pricing. A recent White House report notes that the idea is “to set prices based on demand, or what customers are willing to pay, rather than costs.” But the report cautions that luring customers with false promises or burying significant details in the fine print can tip the scale to fraud—and that vigilance is necessary to ensure that businesses don’t use data they collect online to put consumers at a disadvantage based on race, gender or religion.

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4. And sometimes it works to your benefit.

When a movie chain offers discounts to students, seniors and members of the military, that’s price discrimination. Lower prices for members of loyalty programs fall under the same heading.

5. You can beat Web retailers at their own game.

Check how a site is filtering search results, and choose the option to sort from lowest to highest price. But don’t stop there. If a site offers the option to log in, check prices before you log in and again after entering your username and password. Look up prices on your personal computer as well as your smartphone and tablet. View prices on different Web browsers—say, Safari and Chrome. Run a search with “cookies” enabled (cookies provide data about your online activities to Web sites), then open a new window and turn on private, or incognito, browsing, which won’t save browser history. Search again.

6. Use all the tools at your disposal.

If you have a choice, compare prices on several sites and apply coupon codes. Tools such as the Honey browser add-on, CouponSherpa.com and RetailMeNot.com will help you find coupons. PriceGrabber.com and the InvisibleHand browser add-on can help you compare prices across sites.