Remember the hoo-ha a few years back when consumers noticed that Amazon.com was offering the same item at different prices from moment to moment or consumer to consumer?

The practice came to light on a Web forum frequented by DVD fans. One had bought Julie Taymor’s “Titus” for $24.49, and noticed a week later that the price had jumped to $26.24.

Then he did an experiment: He deleted all the “cookies” on his computer – the tiny files Web sites use to identify and track return visitors. The price dropped to $22.74.

Faced with this and similar tales, Amazon disavowed the practice, and insisted it had just been experimenting randomly with prices.

But consumers and analysts assumed something else: that Amazon was using its ability to analyze data to make more money by charging more to loyal customers and less to those it was trying to lure.

Joseph Turow says Internet-era youth draw similar conclusions about most businesses..

What do they know about you?

“The students almost unanimously believed that if you go to some Web sites, you’ll get a better price the first time than if you come back, because they want to suck you in,” he says.

Is it true? Turow, like his students, seems to assume so.

“Nobody’s making this clear, and the companies are not going to talk about it,” he told me last week, after Penn’s Annenberg Public Policy Center published a study he wrote with two graduate students at the Annenberg School for Communication. “It’s a different world.”

The study confirms what Turow suspected: Beyond students and others who are likewise tech-savvy, most of us are clueless about how much personal information is collected, let alone how it can be combined with other personal data to give businesses an edge.

You probably know, for instance, that banks use credit scores, computed from information in your credit reports, to set your interest rates. They say the scores predict the odds of your defaulting on a loan. But what if they also can predict that you’re unlikely to cancel your card if they raise your credit-card rate from 10 percent to 20 percent?

What if an Internet retailer knows you’re rarely sensitive to prices?

Or, to take a more sinister example, what if some unscrupulous company knew that you had never challenged a credit-card or phone-bill charge?

Merchants always have an edge if they know their customers. So do buyers who know what things are truly worth. Information is always power, even if it’s rarely exactly in balance.

Different prices to different people

But Turow believes, with good reason, that something else is going on with the vast stores of personal data being amassed or manipulated by little-known companies such as ChoicePoint, Acxiom and Epiphany.

He concedes that “price discrimination” – what economists call charging different prices to different people – is nothing new. Sometimes it may seem benign, as with senior-citizen discounts. Other times it’s even laudable, as when a doctor charges less to the poor.

But Turow is skeptical about the effects of what some call “predictive profiling” or “behavioral targeting.” And he’s disturbed by the large gap he found between increasingly common market practices and people’s assumptions, as well as what they consider reasonable and fair. (To see the study, go to http://go.philly.com/consumer.)

Until we rethink the wisdom of allowing virtually unlimited data sharing, businesses will seek new and mysterious ways to use your personal information to gain an edge.

That’s how the market works.

Jeff Gelles writes for the Philadelphia Inquirer.

Want to see more comments on extended warranties? Visit my new Web log, Consumer Inq., at www.philly.com.

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(Contact Philadelphia Inquirer columnist Jeff Gelles at consumerwatch(at)phillynews.com or 215-854-4558.)

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(c) 2005, The Philadelphia Inquirer.

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AP-NY-06-07-05 0618EDT