E-commerce Alert: Geopricing and Geoblocking
by Camila Rioja
Although the matter is not necessarily new, it is a pressing issue. This January, the Public Prosecutor’s Office of Rio de Janeiro (MPRJ) filed a motion against a high profile company in the tourism industry, active in the booking of airline tickets, hotel reservations and other related services. The claim addresses price and availability of services discrimination, based on the geographical location of the consumer. In the industry terminology, such practices are known as geopricing and geoblocking, respectively. The practice is not new and resembles the so-called dynamic pricing, in which prices for a given service vary in real time relative to the demand and supply relation in the region. Higher rush hour rates, commonly applied in peer-to-peer ridesharing, are an example of how dynamic pricing works in practice.
In the case at hand, a competitor collected the evidence and notified the MPRJ. Notwithstanding, due to the products’ prices and availability transparency, inherent to the service, the alert could have been made by any interested party (such as the users themselves). Although the practice of price discrimination is not new, the tools used for such purpose are increasingly sophisticated. The practice aims at increasing companies’ profits by raising the product price up to the point a given client would, in theory, be willing to pay — but without discouraging the purchase. So this delicate mathematics succeeds, consumer profile information is essential. Hence, data collected by the cookies of the websites accessed by the consumer feeds the algorithms that determine the price in each specific purchase. Country, city, neighborhood, shopping profile, age, gender, web browser history and general preferences are examples of information that can be used in the decision making process of the algorithms for the pricing and/or availability of services.
Although websites cookies policies detail the type of information collected — usually under the claim of improving the user experience –, the application and processing of the information and data collected are not disclosed to the user. Such information provides for a database whose value is recognized by those familiar with the reach of the new technologies. Although Brazilian legislation does not yet address this matter, without prejudice to specific legislation pertaining regulated sectors, MPRJ’s action validates that Brazil is in tune with global data protection trends. The General Data Protection Regulation (GDPR) in Europe, which goes into effect in May, has wide global repercussions — including in Brazil. One of the GDPR obligations is that the purpose of the data collection must be shared with consumers.
It is worth mentioning that despite the lack of specific legislation, there are tools available – legal and technological – that allow not only for a decision making process aligned with the objectives of both individuals and companies in matter relates to data privacy, but also the implementation of best practices in the collection processing of information. The result of such measures? Mitigating legal and reputational damages of both consumers and service providers.
The Opice Blum team remains at your disposal in case of any further questions.
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