Before you register for that rewards program, read all about the sinister downside of loyalty apps
Who doesn’t love cashing in on members-only perks? Maybe you’re sipping champagne in the airport lounge, compliments of your frequent flier status; collecting free fragrance and skin-care products after shopping at your go-to beauty store; seeing a 20% member discount pop up after punching in your phone number at the grocery store checkout. Sure, you know there’s a trade-off, but you deserve a bonus for your brand loyalty.
But something new and sinister is lurking behind loyalty programs. Ahead, tech entrepreneur and privacy expert Mark Weinstein, the author of Restoring Our Sanity Online: A Revolutionary Social Framework and the thought leader behind the popular TED talk “The Rise of Surveillance Capitalism,” explains why you should be wary. Keep reading to learn more about what’s going on with loyalty programs—and whether you should cancel your memberships.
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How are loyalty programs supposed to work?
Loyalty programs are offered to consumers as a way to “reward devotion with discounts and freebies,” Weinstein says. The rewards vary by company and industry, but examples may include things like:
- Free products: Companies offer goods in exchange for points accumulation or reaching a certain monetary threshold. Example: Sephora’s Beauty Insider program, which also offers free gifts with purchase and on your birthday.
- Discounts and cash back: Grocery stores and credit cards often give monetary discounts and rewards to loyalty-program members. Example: Target Circle 360 members who spend certain amounts get an occasional $10 to $25 reward.
- Personal perks: Airlines are big drivers here, offering free checked bags, priority boarding and upgrades for certain status tiers. Example: United Airlines MileagePlus members accumulate points through flying or using the airline’s branded credit card.
Unregistered customers would typically not receive these kinds of rewards.
What’s the new problem with loyalty apps?
It’s something called “surveillance pricing,” and it’s proving problematic. “Surveillance pricing is when companies use your personal data to decide what price to charge you for a product or service,” Weinstein says. Yes, you read that right: Instead of rewarding loyal customers, some companies may actually charge them more.
“Loyal customers require fewer incentives to purchase because they are ‘regulars,'” Weinstein explains. “Here’s an example of this twist: a Washington Post reporter who was a Starbucks Rewards member found that his app showed fewer promotions during months he bought more coffee.” Not a very nice way to treat your biggest fans!
How do companies know what you’d be willing to spend?
It’s not just the fact that you’ve bought a latte every day for the past year.
“The data nearly every site and app has access to includes your current and historical tastes, opinions, browsing and spending history, geolocation, demographics, income, credit line access and much more,” Weinstein says. “Then, supercharged by psychographic analytical AI, the algorithm instantaneously determines the maximum you’d be willing to pay for something you’ve either just searched for,” or a product or service pitched into your newsfeed, for example.
Weinstein notes that the practice of pricing for different market, demographic or geographic segments isn’t new. “It’s as old as capitalism,” he says. “The desire to understand your customer’s behavior and how to incentivize them is also important for all companies.” What’s changed is the lengths they’re now going to to get your data, and how they’re using it.
“Surveillance pricing egregiously invades everything about you to determine what you, as an individual, would most likely be willing to pay—rather than the universal pricing model we’re all historically used to (with essentially one price for all customers interested in a particular level of service or goods).”
What kinds of loyalty apps does this affect?
All of them. From coffee shops to airlines, if a loyalty program requires you to register online or on an app, it’s likely using surveillance pricing to some extent. “Loyalty apps are data goldmines,” Weinstein says. “Every purchase, every click, every time you open the app gets recorded and analyzed. It’s all feeding information about your habits, income level and browsing patterns.”
Here are some examples of the trend:
Airlines
Weinstein says airlines are masters of surveillance pricing. “Two people sitting next to each other [on a flight] often paid significantly different prices, not just because they booked at different times, but because the AI-supercharged algorithm assessed their willingness to pay differently.”
Some airlines have even gone as far as trying to normalize it. “This past August, Delta told shareholders it would start using AI to personalize ticket prices,” Weinstein says. “After swift backlash from the public and lawmakers, Delta has backed down from its plans—for the present.”
Retail
Retail companies are also guilty of changing their prices based on your personal data and location, including two of the biggest retailers around. Weinstein uses an egregious (and scary) example of surveillance pricing working in real time at Target:
“The Target app charged $100 more for a TV when a shopper was in a Target parking lot [presumably ready to purchase] compared to when they were further from the store,” he says. And forget about getting a single price at the largest online retailer around: “At Amazon, their prices are so dynamic, the average price of a product changes every 10 minutes!”
Travel booking
A few weeks ago, I was browsing some travel booking sites, including Expedia and Agoda, and noticed prices seemed high for dates that would normally be considered off-season. The possible cause for the price increase? I’d just booked back-to-back stays in a tourist hot spot for a guidebook project I was working on. The travel booking sites and apps likely noticed I’d been searching rates at dozens of hotels (which probably made me seem overly interested) and that I’d booked multiple trips within a short period. They may have seen me as a consumer willing to spend more in that moment and adjusted their prices accordingly.
What’s even creepier is that as I am writing this (in Google Docs), I just received an email notification from Expedia with the subject line “Don’t miss hotel deals under $150.” Yes, that’s right: In the exact moment that I mentioned Expedia jacking up prices, they sent me an email assuring me they’ve got some lower-priced hotels too—despite the fact I wasn’t searching for hotels at all. Yikes.
Is surveillance pricing legal?
Currently, yes. But that could change. Weinstein says the Federal Trade Commission (FTC) has started looking into it, specifically how companies track consumer behaviors beyond traditional methods. “What’s missing is any comprehensive federal privacy legislation that restricts the essentially predatory practice of surveillance pricing.”
Weinstein notes that some states, including California, are trying to put an end to surveillance pricing. “California’s Assembly passed a bill this past May to ban surveillance pricing, though it stalled in the State Senate,” he says. But they’re not giving up. “The bill’s author plans to reintroduce a stronger version in 2026.”
He adds that there’s growing momentum in Congress too. “In July, U.S. Representative Greg Casar introduced a bill (Stop AI Price Gouging and Wage Fixing Act of 2025) to end this practice nationwide.”
They’re not alone. Weinstein says that other groups, like the Electronic Frontier Foundation (EFF), the Consumer Federation of America (CFA) and the Electronic Privacy Information Center (EPIC), are all part of the movement to end surveillance pricing.
Should you ditch your loyalty apps?
That’s a personal decision, but it’s probably not necessary to quit them completely if you are receiving benefits that make sense for you. “Loyalty apps are generally a net positive, particularly if you take the time to do your own cost/benefit analysis—ironically with the help of ChatGPT or some other strong analytical tool,” Weinstein says.
The bottom line? “If the convenience [of loyalty apps and programs] is worth it, keep using them. Just go in with your eyes open,” he adds. “Treat every ‘personalized offer’ with a healthy dose of skepticism.”
Is there any way around surveillance pricing?
Yes, there are things you can do to minimize the negative impacts of surveillance pricing. And you should, after learning how many of these programs are being used to potentially offer you higher prices. Many companies do not have your best interests in mind!
Here are some tips to get the best deals without being taken to the cleaners:
- Go incognito: “Browse in ‘incognito mode‘ when shopping online,” Weinstein suggests. “Simply open your browser’s menu and select the private or incognito window option.”
- Clear your cookies: Weinstein recommends making a habit of clearing the cookies on your browser. This is easy to do in your browser settings, often under the History tab.
- Use a VPN and other tools: “You can use a Virtual Private Network (VPN) to hide your location, and use privacy-focused browsers and tools that block trackers,” Weinstein says. “Compare prices as a ‘new customer’ versus being logged in, and you’ll be surprised how often new customers see better deals.”
- Use an alternative search engine: It’s no secret that Google tracks and shares your online activities. In an effort to move away from Google and its tracking, I’ve been playing with alternative search engines that prioritize privacy, like DuckDuckGo.
- Consult Consumer Reports: Weinstein says Consumer Reports is an excellent resource for products, pricing, the best credit cards to carry based on benefits and more.
- Shop around: Joining a loyalty or member program doesn’t actually require your loyalty. Weinstein says to forget feeling any allegiance, and shop around for the best prices instead. “You’ll always come out ahead by shopping around rather than assuming your ‘loyalty discount’ is actually a good deal.”
Is there more to worry about?
Unfortunately, loyalty apps and surveillance pricing are the tip of the iceberg. Weinstein says that the same surveillance mechanism used to create personalized and sometimes higher prices is being used to manipulate us in other ways.
“It’s shaping our thoughts and influencing nearly every aspect of our lives, and even swaying our votes,” he says. “This broader business model is known as ‘surveillance capitalism.’ The bigger picture is about power and information asymmetry. Companies know everything about you, but you know nothing about how they’re using that information against you.”
So what can we do? “There’s no need to accept the status quo, where our personal data is used for covert pricing manipulation,” Weinstein says. He notes that awareness is important. “We must demystify the situation so that everyone is aware of the massive data harvesting and manipulation impacting our everyday lives.”
The next step, he says, is legislative action. “The good news is that there are promising bipartisan efforts well underway, including COPPA 2.0 [Children and Teens’ Online Privacy Protection Act], which would extend online privacy protections to everyone under 18, and the American Privacy Rights Act (APRA), which would give all Americans control over how their data is collected, shared and sold.”
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Sources:
- Mark Weinstein, privacy expert, inventor and author of Restoring Our Sanity Online: A Revolutionary Social Framework; interviewed, October 2025
- TED: “The Rise of Surveillance Capitalism”
- Washington Post: “Your Starbucks loyalty app might be costing you more”
- The Conversation: “AI is using your data to set personalised prices online. It could seriously backfire.”
- Harvard Law Today: “The algorithm thinks you’re rich. Prepare to pay more for that flight.”
- Consumer Watchdog: “New Report Details How Companies Use Surveillance to Charge Different Prices for the Same Item”
- Federal Trade Commission: “FTC Surveillance Pricing Study Indicates Wide Range of Personal Data Used to Set Individualized Consumer Prices”
- Consumer Reports: “California Assembly passes bill banning unfair surveillance pricing”
- CBS8: “San Diego lawmaker proposes ban on ‘surveillance pricing'”
- NBC News: “This congressman wants to ban companies from using your search history to set personalized prices”
- Better Business Bureau: “COPPA 2.0 Reintroduced–What You Need to Know”
