Mark Pestronk
Q: Is it legal for travel suppliers to charge different prices to different consumers depending on their personal characteristics and documented spending patterns? Can I do the same thing for my travel agency's service fees; e.g., charge a higher fee to someone who I know is wealthy?
A: Suppliers and travel agencies obviously can't discriminate based on race, color, religion, national origin, gender, disability, age or other characteristics protected under federal and applicable state civil rights laws. But otherwise, there are no laws against deciding to charge a wealthier client a higher fee for the same service.
The legalities may well change in the years ahead, as so-called surveillance pricing is becoming so sophisticated that sellers are using dozens of undisclosed data points to set pricing on a minute-by-minute basis. Some of the data is purely personal, such as the neighborhood a person lives in, and some is based on circumstances like whether someone is shopping at the last minute.
As an online shopper, you probably already know that prices can change depending on whether you have logged in to a website or whether you have been browsing the site for a long time. This is particularly reported to occur with airfare searches and has drawn attention from consumer advocates and members of Congress, although the major airlines have not admitted that it occurs. These practices are unfair, but they are not yet illegal.
So far, the only state to outlaw any sort of surveillance pricing is Maryland, whose law became effective in April. The new law applies only to grocery stores and online food shopping. It bans charging different customers different prices for the same item based on purchase history, location, browsing behavior and inferred willingness to pay. In other words, Maryland grocery stores cannot charge you more (or less) than another shopper for the same item because of who you are or what the store knows about you.
I predict that other states, especially blue states like California, will be adopting similar laws and expanding their scope beyond groceries. Under the Airline Deregulation Act of 1978, however, states cannot affect airfares, as airline pricing and service can be regulated only by the federal government.
The DOT has taken no steps to investigate or regulate surveillance pricing, although it has been urged to do so by some members of Congress. Given the generally pro-business bent of the current administration, it is unlikely that the DOT will do anything except possibly investigate the extent of such pricing and propose disclosure rules.
Other travel suppliers' prices and travel agency service fees are subject to regulation by the Federal Trade Commission, which has been studying surveillance pricing for two years. I predict that it will eventually decline to prohibit the practice.
If you have an online agency, you may be required to disclose the factors that are used to determine your fees, but as with most fine-line online disclosures, you can bet that no one will read them.