Dangers of dynamic pricing
The government is set to crack down on a practice that means some consumers pay more than others for the same thing.
At first, it sounds like something from a superhero movie. But to those who’ve fallen victim to “dynamic pricing”, it is far from a force for good.
A recent episode of the ABC’s Four Corners current affairs program focused attention on the practice in the context of concert tickets.
The investigation into the owner of Ticketmaster, multinational conglomerate Live Nation, alleged consumers were subject to many “hidden” fees when purchasing concert tickets.
The ABC claimed that ticket prices at the Palais Theatre in Melbourne could cost $65 more than they appear, thanks to a raft of extras, including “hidden” booking, service, and infrastructure fees on top of disclosed transaction, resale, and optional insurance fees.
But dynamic pricing is something else: the phenomenon where prices for the same product or service fluctuate according to demand or other factors. Ticketmaster is reported to have used it for a recent Green Day concert, where some fans paid as much as $500 for a ticket.
Uber’s practice of “surge pricing” – where fares are higher at times of peak demand – is a similar phenomenon.
Dynamic pricing has also become a big issue in the United Kingdom, with revelations concerning sales of tickets to the Oasis reunion concerts next year.
British consumer magazine Which? reported, “Ticketmaster’s use of dynamic pricing – where prices rise when demand is high – meant some ‘in demand’ tickets had soared from the advertised £148.50 [about A$289]to more than £300 [A$583] each. Fans hadn't been warned about this and were understandably outraged.”
Which? also noted the use of dynamic pricing at pubs (20 pence more per pint on busy days), theme parks, and supermarkets (although in the last case, prices can go down as products approach their use-by date).
In Australia, Prime Minister Anthony Albanese has said consumer law will be updated to “stop businesses from engaging in dodgy practices that rip consumers off”.
Assistant Treasurer Stephen Jones added, “We'll be looking at the entire economy … dynamic pricing, which is affecting everything from getting a ticket to a sporting event to pop concerts.”
The Federal Government has also promised to look into:
“Subscription traps”, where people sign up easily online but find it difficult to cancel
“Drip pricing”, where small amounts are added after the initial purchase
Deceptive online practices. Such as creating a false sense of urgency, aimed at confusing consumers into making a purchase.
Erin Turner, chief executive of the Consumer Policy Research Centre, welcomed the moves.
She said, “There’s a lot of different unfair business practices out there, but we’ve seen again and again over the last decade that our consumer law isn’t fit for purpose, it doesn’t protect people against really harmful practices that should be stopped and are stopped in other countries.”
Related reading: ABC, Nine News, Which?, InQueensland
