Should Canadians accept cookies online? Find out the cost

For this week’s Top Story, we’re investigating how seriously you should consider accepting cookies when you’re online.

Cookies can be expensive in unexpected ways, and we’re not talking about the delicious kind made from butter and flour.

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The digital breadcrumbs you leave behind may be paying a role in determining the prices you pay when shopping online. However, experts suggest that cookies are just one item in a bakery full of data sources that can cause different Canadians to pay different prices for the same item.

Each of those data sources builds an online profile that signals to companies whether you might be willing to pay a little extra for a product or service, and may encourage them to adjust prices accordingly. Unlike surge pricing, where costs change for everyone based on demand, this form of algorithmic pricing or surveillance pricing adjusts prices based on what the seller knows about the individual.

Despite plenty of anecdotal evidence that companies engage in algorithmic pricing, there is no smoking gun (or oven) that proves they do, and they aren’t legally required to disclose it. As it currently stands, however, only Manitoba outlaws the practice in Canada.

What are digital cookies?

Browser cookies are small text files left by online services on your device to track things like your login details or shopping cart history. It’s how a website you’ve visited before knows your username, your preferred language option, or the items you previously searched for. It might feel like your device is listening in on your conversations, but it doesn’t really need to, given how much information you’ve probably handed it directly, whether or not you were aware of it.

These “first-party cookies,” as they’re known, have been part of the infrastructure of the internet since the early ’90s, and they can make for a better online experience.

Third-party cookies, meanwhile, track your browsing habits as you move from site to site, creating an online profile that is often used to deliver more personalized ads.

Do cookies impact the prices I see online?

Cookies may be an enabler of algorithmic pricing, but companies now have numerous ways to collect information about your device’s make and model, your geographical location, your recent purchases, search history, major life events, even remaining battery life—across every device you own, including your smart watch or TV.

“Every time you browse, every time you search, every time you tap a loyalty card, you’re leaving data, and right now companies can stitch all that data together across your devices,” says Jake Effoduh, a professor of data science law at Toronto Metropolitan University’s Lincoln Alexander School of Law. “The challenge is not each of these points; the challenge is what technology can now do with a combination of your location, your device type, your purchase records, all of these data points pieced together with an algorithm.”

With that information, plus AI, companies infer things about you, like your approximate income, and charge higher prices to those that can afford it. They could also charge more to lower-income Canadians for services like insurance or loans.

Effoduh explains that there is no concrete evidence that companies are using this data to charge different prices for the same items in Canada, as disclosure is not mandatory, however there is evidence they do in New York, one of the few places where disclosure is legally required.

What can Canadians do about algorithmic pricing?

There are steps Canadians can take to reduce the likelihood of being charged more based on their online profile, but preventing the practice entirely—or at least providing more transparency—will ultimately fall to lawmakers.

“Cookie technologies are often the enabler behind browser history surveillance, so the obvious answer is to not just automatically hit ‘accept all’ when we get those pop-ups, and to clear cookie caches,” says Emily Osborne, a Policy Research Associate at the Canadian Shield Institute, a think tank dedicated to economic and digital sovereignty.

Canadians who are concerned about algorithmic pricing are also encouraged to turn off location services and utilize “incognito mode” or private browsing when possible.

“However, companies are increasingly using other methods of surveillance that rely less on cookies and more on behavioural patterns,” Osborne adds. “This means that disabling third-party cookies or clearing your cookies is becoming less effective as a protection of our data, so this is an area where we might need stronger data governance systems and legislation in place to protect against how personal data can be leveraged.”

Read more from this issue of The Get:

1. Before it gets awkward... Who pays for the date in Canada?
2. Organizer Jen Rowe on how decluttering can improve finances
3. Are Canadians over-celebrating and overspending events?
4. Why is butter so expensive right now?