Changes to Prices Advertised Online: Analysis of Business Practices and the Legal Framework in Canada RESEARCH REPORT

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Changes to Prices Advertised Online: Analysis of Business Practices and the Legal Framework in Canada RESEARCH REPORT Changes to prices advertised online: Analysis of business practices and the legal framework in Canada RESEARCH REPORT Report produced by Option Consommateurs and submitted to Innovation, Science and Economic Development Canada’s Office of Consumer Affairs June 2018 Modulation of the price advertised online Option consommateurs received funding under Innovation, Science and Economic Development Canada’s Contributions Program for Non-Profit Consumer and Voluntary Organizations. The opinions expressed in this report are not necessarily those of Innovation, Science and Economic Development Canada or the Government of Canada. Reproduction of this report, in whole or in part, is permitted provided that the source is acknowledged. Reproduction or any reference to its content for advertising or commercial purposes, however, are strictly prohibited. Legal Deposit Bibliothèque nationale du Québec National Library of Canada 978-2-89716-050-0 Option consommateurs 50, Ste-Catherine Street West, Suite 440 Montreal, Québec) H2X 3V4 Phone: 514 598-7288 Fax: 514 598-8511 E-mail: [email protected] Website: www.option-consommateurs.org Option consommateurs, 2018 ii Modulation of the price advertised online Contents Option consommateurs ......................................................................................................... iv Acknowledgments ................................................................................................................. v Summary .............................................................................................................................. vi Introduction ..........................................................................................................................7 Research Questions ..................................................................................................................... 7 Methodology ............................................................................................................................... 7 1. Background to differential pricing practices ........................................................................9 1.1. Portrait of an e-commerce practice ..................................................................................... 9 1.2. Technological factors .......................................................................................................... 10 1.3. Cause for concern ............................................................................................................... 12 1.4. Issues raised ....................................................................................................................... 15 2. Practices of Canadian websites ......................................................................................... 17 2.1. A digital field investigation ................................................................................................. 18 2.1.1. Data collection ............................................................................................................. 18 2.1.2. Online differential pricing ............................................................................................ 20 2.1.3. Differentiation of search results .................................................................................. 22 2.2. A look at the policies of online merchants ......................................................................... 22 2.2.1. Little pre-purchase information .................................................................................. 23 2.2.2. Tracking consumers ..................................................................................................... 23 2.2.3. Some differentiating factors........................................................................................ 26 2.2.4. Customizing the user experience ................................................................................ 27 2.2.5. Avoiding online tracking .............................................................................................. 28 3. The consumers’ point of view ........................................................................................... 30 3.1. Online consumer profile ..................................................................................................... 30 3.2. Consumers’ knowledge ...................................................................................................... 31 3.3. Consumer perceptions ....................................................................................................... 32 3.3.1. Regarding the practices of online merchants.............................................................. 32 3.3.2. Regarding differential pricing ...................................................................................... 34 4. Some legal avenues .......................................................................................................... 37 4.1. An overview of the Canadian legal framework .................................................................. 37 4.1.1. Anticompetitive practices ........................................................................................... 37 4.1.2. Representations on prices ........................................................................................... 37 4.1.3. Digital data and protection of privacy ......................................................................... 40 4.1.4. Online differential pricing and the right to equality ................................................... 42 4.2. An overview of foreign law ................................................................................................. 44 4.2.1. United States: a fragmentary legal framework ........................................................... 44 4.2.2. European Union: strict data protection ...................................................................... 46 Conclusion and Recommendations ....................................................................................... 50 Appendix 1 – Protocol for participants .................................................................................. 53 Appendix 2 – Answers to survey questions ........................................................................... 77 Option consommateurs, 2018 iii Modulation of the price advertised online Option consommateurs MISSION Option consommateurs is a non-profit organization whose mission is to promote and defend the rights and interests of consumers and ensure that they are respected. HISTORY Option consommateurs has been in existence since 1983, when it arose from the Associations coopératives d’économie familial movement, more specifically, the Montreal ACEF. In 1999, it joined forces with the Association des consommateurs du Québec (ACQ), which had already pursued a similar mission for over 50 years. PRINCIPAL ACTIVITIES Option consommateurs helps consumers experiencing difficulties, by offering them budget consultation and information sessions on budgeting, debt, consumer law and the protection of privacy. Each year we produce research reports on important consumer issues. We also work with policy makers and the media to denounce unacceptable situations. When necessary, we institute class action suits against merchants. MEMBERSHIP In its quest to bring about change, Option consommateurs is active on many fronts: conducting research, organizing class action suits, and applying pressure on companies and government authorities. You can help us do more for you by becoming a member of Option consommateurs at www.option-consommateurs.org. Option consommateurs, 2018 iv Modulation of the price advertised online Acknowledgments This research was conducted by the research team at Option consommateurs. It was supervised by Ms. Maryse Guénette, Head of Research and Advocacy, Option consommateurs. It was made possible through the financial support of Innovation, Science and Economic Development Canada’s Office of Consumer Affairs. Option consommateurs wishes thank all the experts who generously agreed to be interviewed as part of this project or who participated in one way or another: Professor Maude Bonenfant of the Social and Public Communication Department at Université du Québec à Montréal (UQÀM), Professor Sébastien Gambs, of the Computer Science department at UQÀM, Professor Jonathan Roberge, of the Urbanization Culture Society Centre of INRS, Ms. Anne-Sophie LeTellier, co- director of communications at Crypto.Québec and Mr. Martin Gilbert, ethics researcher. Option consommateurs also extends its thanks to Dr. Bruno Marien, sociologist and lecturer in the Political Science Department at UQÀM, for his methodological and statistical support in the production of this report, as well as Professor Christian Deblock, economist and director of the Political Science Department at the same university, who carried out the evaluation of the report. Option consommateurs, 2018 v Modulation of the price advertised online Summary Are prices advertised online the same for everyone? Recent U.S. studies reveal that this is not always the case. Internet merchants may continually change the prices they advertise. They can also collect the data generated by those who visit their websites and use it to personalize the prices they advertise them. As a result, individual users will see different prices depending on their particular profile. To better document the existence of such commercial practices in Canada,
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