Amazon Price Test Raises Net Privacy Outcry

Amazon.-com’s random consumer price test, which charged different customers different prices for the same DVD movies, has raised privacy concerns among consumer groups fearful of retailers who use the Web to gather large quantities of personal information about shoppers.

Using a sales strategy called “dynamic pricing,” whereby a re-tailer can determine a customer’s ability to pay based on desire and means, is not new. But when Amazon launched a price test in September charging some regular customers 3-5 percent more for the same DVDs, the public outrage was considerable.

“This is the first clear example of how the ubiquitous collection of personal information on the Web is harming consumers, and that is not a good precedent to set,” said Andrew Shen, a policy analyst at the Electronic Privacy Information Center, a public-interest research center in Washington, D.C.

Seattle-based Amazon, which wanted to determine how lower prices affected sales, said it varied the discounts on a random basis, and that no customer demographic information was used in the test.

“We never tested, and we never will test prices based on customer demographics,” said Amazon CEO Jeff Bezos in a statement. “What we did was a random price test, and even that was a mistake because it created uncertainty for customers.”

In response to the outcry, Amazon last month changed its test-pricing policy and has refunded more than 6,000 customers about $3.10 each.

Shen predicted the issue will arise at a Senate Commerce Committee hearing this week to discuss a bill requiring companies to post privacy policies. “This stems from the privacy problem in general,” he said. “I could get a different price than the guy next door, and I may not realize it.”