PERSONALIZED PRICES IN THE DIGITAL MARKETPLACE: A STUDY OF ALGORITHMIC PRICE DISCRIMINATION AND THE CONSUMER PROTECTION LAW

Abstract

There is a growing usage of data driven algorithms in this digital e-commerce era, enabling sellers on the platforms and platforms itself engaging in the price discrimination and personalised pricing and adjustments in real time. The adoption of these practices though on the surface level appear to be efficient and competitive but raise serious concerns regarding transparency, opacity and violation of consumer rights by leveraging consumers personal data to create such personalised pricing in the digital marketplaces. The paper begins to analyse the challenges posed by the algorithmic price personalisation and goes on to examine the effectiveness of the Consumer Protection Act of India, 2019 to effectively address these challenges. The paper employs a doctrinal approach through comparative lens, to understand the statutory provisions and case laws addressing the issue with reference to e-commerce. The paper further delves into the consideration of interplay of consumer law and allied legal framework including data protection and competition law, to identify the appropriate regulatory framework for algorithmic pricing. The questions answered in the paper are: (i) can personalised pricing be regarded as an unfair trade practice as mentioned in the consumer protection act;(ii) how much transparency in pricing, data use, and segmentation is required to be considered as a violation to consumer’s right to be informed and (iii) what kind of remedies are available and desirable.  The paper argues that present consumer protection law already has measures to target the algorithmic price personalisation but a clearer and transparent provisions, guidance and regulatory reforms are required to make protections effective in digital marketplaces. The paper proposes a calibrated approach that is strong transparency and auditability requirements of price algorithms, targeted unfair dealing and discrimination measures, enhanced data governance and pro-active regulatory approach. In conclusion, the paper suggests that harmonisation of consumer protection law with technological oversight is necessary to maintain the market, transparency and fairness while still allowing personalised prices in a regulated manner.