Allan Candelore had a problem with Tinder Plus prices, and made it known. He sued the company behind the dating app for discrimination. It was 2015.

In a California trial court, Tinder argued there was no problem. The company was charging users over the age of 30 twice as much for its premium service than for users under 30, it said, because younger people are "more budget-constrained".

Tinder argued that Allan's case should be dismissed because age-based pricing wasn't arbitrary, unlawful or unfair, and didn't suggest "irrational, invidious stereotypes". The court agreed. 

But Allan, who was in the older cohort and had paid more for Tinder Plus, still sensed an injustice. His lawyers set out to prove it.

The price isn't right

In 2015, Tinder was already an international phenomenon. The free app allowed users to browse the profiles of other users in their area and reject or connect with them in one fell swipe of a finger – to the right to start chatting, to the left to pass. 

That year, the company launched Tinder Plus, which had extra features such as the ability to undo swipes and look for matches in other areas. The cost to unlock these features? For users below the age of 30, $US9.99. For users over 30, $US19.99.

Lawsuits followed in California, where the company is based. People were upset to learn that their age could come with a surcharge. 

Age-old debates 

In 2018, Allan's case went before an appeals court. This time, the judges ruled in his favour, invoking California civil rights law: customers had to be treated as individuals rather than as members of a group based on attributes such as gender, race or age. 

They noted rulings that upheld differences in treatment based on age: higher interest rates on bank deposits for seniors, cheaper movie tickets for children. The justification: social policies that match, such as retirement for the elderly and restrictions on child employment.

But Tinder's pricing model, they said, for which the price point changed at age 30, amounted to prohibited arbitrary discrimination.

Tinder had the highest worldwide consumer spend of all non-gaming phone apps in 2019, beating Netflix

The judge who wrote the ruling pointed out that Tinder's argument could be used to justify "higher prices for all consumers 30 and older in even the most essential areas of commerce – such as grocery shopping, gasoline purchases, etc. – even in instances where an individual did not in fact enjoy the economic advantages that are presumed about his or her age group". 

Tinder argued that the decision was misguided. In an appeal to the California Supreme Court, the company wrote that its pricing model was benign, and that the ruling "will have far-reaching and negative economic consequences both for young people trying to find their financial footing and for a wide variety of businesses and organisations serving young people". 

Furthermore, it said, the decision "imperils a host of common discounts for young adults never before thought to be suspect – from young‐lawyer fee discounts in bar associations to college‐student discounts for movie tickets".

But the analogies don't quite fit. Students can be different ages, so a mature-age student can access movie tickets at student prices. And bar associations are made up of only one profession: lawyers, who reliably start on much lower salaries than later in their careers.

Last year, Tinder settled another case in California over the same issue. The company again denied any wrongdoing under the terms of the settlement. 

But it made payouts to Tinder Plus subscribers who paid the higher prices, and agreed to stop charging new subscribers over the age of 30 more for its services than those under 30 – at least in California. The app could still offer discounts to people under 21.

CHOICE mystery shop finds Australian prices vary

Despite the lawsuits and some disapproving press over its pricing, business is booming for Tinder. According to mobile data analytics firm App Annie, Tinder had the highest worldwide consumer spend of all non-gaming phone apps in 2019, beating Netflix, which came in second. In Australia, Tinder ranks among the top-grossing apps on iPhones, and smartphones that use Google Play. 

To find out more about the app's prices in Australia, we got 60 people to sign up to Tinder. We set quotas based on gender, sexuality (using the Tinder categories "straight" and "queer"), location and age group (18–29, 30–49 and 50+). The shoppers logged these attributes along with the prices they were shown for Tinder Plus.

The difference between the lowest and the highest price was huge. A straight male over 50 in a metropolitan area was given the price of $34.37 for one month – almost five times as much as a queer female under 30 in a metropolitan area, who was offered the same service for $6.99. 

On average, people over the age of 30 were offered prices that were more than double those given to people under 30, as in the US. 

However, there were also large price variations within these age groups, ranging from $6.99 to $16.71 in the under-30 cohort and $14.99 to $34.37 in the over-30 one. We didn't see a pattern that could explain these differences.

Tinder's (non-)response

Tinder didn't respond to our repeated requests for an interview with its chief marketing officer, Jenny Campbell, or its country director for Australia, Kristen Hardeman, to discuss these prices and how they appear to contravene Australia's discrimination laws. 

Nor did it respond to questions we put in writing asking how the company sets its prices for Tinder Plus, why it charges different prices for different people, and why it charges older people more than it charges younger people. We also tried to connect with Campbell and Hardeman on LinkedIn, asking to discuss the pricing of Tinder Plus. Neither has responded.

In the past, a spokesperson for Tinder was reported saying that prices were based on a combination of factors, including what the company learnt through testing, such as that certain price points were suited to certain age groups. 

This kind of pricing model is discriminatory and would fall foul of Australia's anti-discrimination laws

Paul Harpur, anti-discrimination law expert at the University of Queensland

Shortly after Tinder Plus was rolled out, Tinder's co-founder, Sean Rad, told a tech conference: "Our intent is to provide a discount for our younger users." There were groans from the audience, reportedly.

Although Tinder has defended its tiered pricing by saying it's all about opening up access to young people, elsewhere the company has said it's actively targeting the youth market.

In June, Tinder CEO Elie Seidman did an interview with The Verge in which he said the company is focusing on how to keep attracting young people to the app. He said Tinder is the only dating platform that is "focused entirely, with all of our energy, on 18 to 25, on Gen Z".

Paul Harpur, an expert in anti-discrimination law, thinks a case like the ones brought against Tinder in California could be won in Australia.

Flouting discrimination laws?

Paul Harpur, an expert in anti-discrimination law at the University of Queensland, says getting a person to pay more for an app because they're older is direct discrimination based on age. 

"There is no reason a person at 25 should be able to access the app cheaper than a person who is 55," he says. "This kind of pricing model is discriminatory and would fall foul of Australia's anti-discrimination laws."

Under the Age Discrimination Act 2004, Tinder would need to have justifiable grounds on which to charge the older group more than the younger one for its pricing to be legal. Harpur is doubtful that such reasons exist.

"If they made it cheaper for seniors they could be justified because they've got less money," he says. But the idea that all people over the age of 30 have more money than those under 30 is "interesting", he says, because there are many people for whom this simply isn't the case.

"There's a lot of people out there who start their careers and finish their careers at the same pay rate," he points out. "Also, when I was 25 I had more money, essentially, because I had no responsibilities. Now I've got a kid. A lot of people's disposable income would actually go down over time."

Harpur thinks a discrimination case like the ones brought against Tinder in California could be won in Australia. He notes that many of our discrimination laws are based on US laws. "So if you get a discrimination suit in America, there's a reasonable chance you'd at least get a hearing here," he says.

The 3 types of price discrimination

The practice of charging people different prices for the same product is quite common. It's called price discrimination, and it's a company's attempt to capture differences in people's willingness to pay for a product, and thereby maximise profits.

In many cases the practice is lawful, but it may be unlawful if it's based on unjust or prejudicial treatment of different groups of people, which is what an appeal court in California decided Tinder was doing. 

Economists tend to refer to three types of price discrimination. Third-degree price discrimination involves sorting consumers into groups based on perceived willingness to pay, using an observable characteristic. Child fares, student tickets and seniors' rates would fall under this category – as would Tinder's age-based prices, in part. 

Businesses can now run vast swathes of our data through algorithms to determine how much each of us, individually, is willing to pay

Second-degree price discrimination provides discounts for bulk purchases, giving consumers the option to choose a different price per unit depending on quanitity – a 48-pack of toilet paper versus a six-pack, for instance, or a season pass for theatre tickets versus individual plays.

As for first-degree price discrimination, this is where you figure out the highest amount an individual is willing to pay and charge them accordingly. It's the most profitable way of setting prices. Auctions and haggling at a market were once among the best attempts at this. 

But the scope of first-degree price discrimination has been expanding rapidly alongside the amount of information about us that's being gathered. Information is key, since how accurately you can predict what someone will pay depends largely on how much you know about them.

Price discrimination in the digital age

Without a set of ground rules on how data about us should be used, technological innovation has so far been a free-for-all. This has produced a range of valuable services, often free to users – but we've paid instead with our attention and personal information.

"The volume of user data collected from consumers worldwide is growing exponentially," the ACCC wrote in the final report of its digital platforms inquiry last year. "According to an IBM estimate, 90 percent of all the data that exists in the world today was created in the past two years." 

Businesses can now run vast swathes of this data through algorithms to determine how much each of us, individually, is willing to pay for something. According to a 2018 report by Deloitte and Salesforce, 40% of retailers that use artificial intelligence to personalise customers' experiences use it to tailor pricing and promotions in real time. 

One possible explanation for the price variations within age groups for Tinder Plus is an attempt by the company at first-degree price discrimination (on top of its use of third-degree price discrimination based on age).

Personalising premiums

David Tuffley, a senior lecturer in applied ethics and cyber security at Griffith University, is wary about big data in the hands of insurance companies. While the unprecedented access to personal information can make risk assessments more accurate, he says, it also comes with the potential for abuse. 

Information such as where a person shops, what they buy and how much they spend – which can be gleaned from payment transactions, browsing history and location data – can help an insurer predict whether they would be willing to pay top price for cover, he says. 

"It doesn't take that long before a pretty accurate picture emerges from a person's daily, weekly, monthly spending habits," Tuffley says. "That's a starting point for a whole series of assumptions about that person that can be deduced." 

He says insurance providers can work out which people are particularly risk-averse based on the lifestyles that emerge from their transaction data, social media activity and other information, and charge those people less for cover because they're less likely to make claims.

But he says insurers may instead decide to charge those people more for cover, because their aversion to risk might make them willing to pay a higher price for insurance.

Tuffley thinks the use of big data to set prices is becoming more widespread. "If you can do it with insurance, you can do it with almost anything else," he says. "The whole field of marketing, because it's worth billions, if not trillions of dollars every year, there's a lot of effort going into perfecting these sorts of tools."

He says this brings with it "a whole lot of privacy concerns … and that's the big issue to be resolved at the moment. We don't hear enough about what's going on, about what [companies] are doing. So they might well be doing questionable things but we wouldn't necessarily know about it."

Tinder's unfair advantage

One of the key findings of the ACCC's digital platforms inquiry was that companies often leverage information asymmetries to their own benefit, while preventing consumers from making informed choices. 

Information asymmetries are when one party has more relevant information than the other in a transaction.

Our mystery shop of Tinder Plus didn't reveal pricing patterns beyond broad age groups, but individual users of the app would know even less about the prices they're shown. 

When users tap an icon within the free app that says 'Get Tinder Plus', prices pop up for a 12-month, six-month or one-month subscription. There's no indication that these prices differ from anyone else's. 

Because each person doesn't know what information Tinder may be using about them to set the price, and are likely to believe they are seeing the same price as everyone else, Tinder is free to personalise its prices without much scrutiny. 

Netflix could increase its profits by 12% if it adopted personalised pricing based on people's web browsing behaviour

This information asymmetry between companies and their customers is a big part of what makes first-degree price discrimination effective and profitable for companies. 

If you know you'll be charged more on one website or app than another because of certain factors, you can choose to spend your money at the cheaper site. If you don't know this, you're more likely to accept whatever price you're given.

The Consumer Data Right (CDR), set to be rolled out in Australia's banking, energy and telecommunications sectors, is meant to act as a counterbalance to information asymmetry. 

The CDR lets consumers use data about their own behaviour and needs to better compare products and services. However, it relies on the idea that prices between products and services are easy to understand and compare. If personalised prices like we appear to be seeing with Tinder become more common, this may be harder to do.

Other companies in on the practice

As media reports have made clear, there are times when this happens in annoying though seemingly harmless ways – airlines tweaking the price of flights depending on where and when a person wants to fly, as well as where and when they search for them, for example. 

A few years ago, if you booked a ride on Uber, the fare would be based on distance and time and only go up with local demand. Then Uber changed the algorithm to better predict a person's willingness to pay, incorporating factors such as the wealth of their destination suburb.

When users tap an icon within the Tinder app that says 'Get Tinder Plus', there's no indication the prices shown differ from anyone else's.

The impact of an algorithm can be dramatic, especially in dollar terms. Orbitz, a travel site, was reported showing Apple Mac users more-expensive travel options after determining they would spend up to 30% more a night on hotels.

In 2016, Benjamin Shiller, an assistant professor in economics at Brandeis University in the US, estimated that Netflix could increase its profits by 12% if it adopted personalised pricing based on people's web browsing behaviour. 

This would clearly be a boon to Netflix – less so for the consumers who'd be left paying double the price for the same service, which is what Shiller calculated some would pay.

Even small pricing manipulations tend to leave people feeling duped. 

In 2000, for example, BBC News reported that Amazon had been charging higher prices for DVDs to frequent shoppers than new visitors of the online store. 

Four in five people are concerned about businesses using data on our online habits to offer a higher price for a product

"By deleting the cookies that Amazon had left on their computer, or using a browser that did not accept cookies, some customers found they were getting much bigger discounts," BBC News reported. (Cookies are online files that store information about a user's interaction with a webpage.)

"The implication was that Amazon was offering bigger discounts to first time visitors to tempt them back." 

Amazon's explanation? The prices were assigned randomly as part of the retailer's regular tests of consumer behaviour. Nevertheless, the company refunded the people who paid more.

But there are times when personalised pricing has gone further, and in concerning ways. 

In 2008, a credit card company settled allegations made by the US Federal Trade Commission (FTC) that it had failed to disclose the way it rated people's credit risk.

The company had determined that people who used their cards to pay for therapy, marriage counselling or tyre-repair services were a higher credit risk, based on the repayment histories of its other customers. 

"Using this type of a statistical model might reduce the cost of credit for some individuals, but may also result in some creditworthy consumers being denied or charged more for credit than they might otherwise have been charged," the FTC wrote in its 2016 report on big data.

Our latest national Consumer Pulse survey, which ran in June, shows that four in five Australians are concerned about businesses not being transparent when it comes to the different prices they may be giving to different people. Four in five people are also concerned about businesses using data on our online habits to offer a higher price for a product.

A quarter aren't aware that organisations can use their personal data to give them a higher quote for a product than they do for someone else.

Winners and losers

That's not to say that personalised pricing can't be used to do good. For instance, some may see it as socially beneficial to charge wealthy people more for a product and charge people struggling financially, less. 

But there's an important distinction to make in all of this: instead of working out how much we can afford to pay, first-degree price discrimination is about finding out how much we're willing to pay. 

It's a point that Harpur illustrates with this example: say a company trawls through your posts on Facebook. From that, it can "make a lot of assessments about what I would be interested in," Harpur says. "But then also [the company] could say, 'He'll pay more' or 'He might have a lot of money but he's a cheapskate, he won't spend it'." 

Price discrimination… may allow businesses, particularly monopolies, to take more of the benefit that would otherwise go to consumers

ACCC in the final report of its digital platforms inquiry

One group of people might "talk about fine wine and others talk about cheap goon, even though they have money – if [companies] know that, they might decide how to price things [based on that information]," he says.

The ACCC addresses this issue in its report. "Some consumers may gain from increasingly personalised pricing – for example, consumers with limited ability to pay may be offered a lower price for products they otherwise could not afford," the commission writes. 

"However, many consumers are likely to pay more, particularly in circumstances where consumers have limited choice of who to buy from, or have a limited inclination to shop around."

"Price discrimination… may allow businesses, particularly monopolies, to take more of the benefit that would otherwise go to consumers through these higher prices", the ACCC says.

The case for transparency

On average, Tinder Plus is more than twice the price for people over 30 than for those under 30.

Without knowing the full list of factors that influence the prices people get for Tinder Plus, we're unable to judge whether the use of such factors is fair or even correct.

Harpur thinks there needs to be greater transparency around how companies, including Tinder, are using data and algorithms to set prices, to ensure these systems aren't creating harmful inequalities in society. 

"If we don't know what's happening and we aren't sure how these inequalities are caused – because it is an inequality, when one person's paying more than another – then we can't assess whether the inequality should be a concern," he says.

If we don't hold everyone to reasonable requirements around transparency and ethics, an insurance company, hypothetically, would be free to use sleep data from your fitness tracker and the sad songs you've been listening to on Spotify as a basis for charging you extra to get mental health cover.

It's also conceivable that a dating site might try to wring more money from you after you've read a few articles about coping with loneliness. Or that a dating app might tailor its prices based on the clientele it wants to attract, leaving unwanted users priced out or unwittingly paying more – although that situation doesn't quite need imagining.

Breaching consumer laws?

We've made a formal complaint to the ACCC asking the regulator to investigate Tinder for potential breaches of the Australian Consumer Law (ACL). 

This is because Tinder doesn't make clear that it uses people's data to set personalised prices. The closest thing to an attempt we found was deep in the wells of the privacy policy on its website, in a separate link to an FAQ page on profiling and automated decision-making at Tinder.

Near the bottom of that page is this sentence: "We also use information about you to deliver offers and discounts tailored to your profile." In our complaint, we argued that most people wouldn't interpret this to mean that Tinder uses their information to set personalised prices. 

We wrote that the lack of transparency around how Tinder uses people's data to determine prices is misleading and deceptive conduct by omission and a use of unfair contract terms under the ACL.

Stock images: Getty, unless otherwise stated.

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