Ask HN: is it legal to price discriminate based on Geo-IP

https://news.ycombinator.com/item?id=6123946

8 16 13 years ago

news.ycombinator.com

If I buy a banana or a coffee in Tunisia or Tokyo I will be charged different amounts even accounting for exchange rates. This has many drivers but essentially Tunisia is poorer than Tokyo so cannot pay Tokyo rates.

So if I sell a online service to Tunisians and Japanese, could I set a different price based on Geo-IP?

lifeisstillgood4• 13 years ago

I have a sneaking suspicion the answer is buy two domain names and serve them from same server.

But then people in Tokyo could theoretically visit the lower priced service site. I recognise there are many barriers to this (not least language) but how will this arbitrage be dealt with "in the future"?

patio11• 13 years ago

Ask a simple question, get a simple answer: not illegal. It may or may not be wise operationally.

aresant• 13 years ago

A sort of interesting side bar - Capital One may have offered different rates to different customers by browser type ->

http://www.conversionvoodoo.com/blog/2010/11/do-different-we...

jeffmould• 13 years ago

There was an article in the Wall Street Journal about this back in December. In particular it dealt with office supply stores having different online prices for different locations based on zip codes.

http://online.wsj.com/article/SB1000142412788732377720457818...

lifeisstillgood4• 13 years ago

Thank you. On the reading list

ignostic• 13 years ago

IP-based pricing is in itself not illegal in any jurisdiction I am aware of, but that doesn't mean you're in the clear.

Legally, you may not charge one protected class more than another. For example, you cannot charge a racial minority more or less for the same service. http://en.wikipedia.org/wiki/Economic_discrimination#Discrim...

But that's not what you're trying to do, right? You don't mean to discriminate intentionally. That just means you are not guilty of "disparate treatment." IP-based pricing will, however, almost definitely lead to "disparate impact." http://en.wikipedia.org/wiki/Disparate_impact

If you charge people in certain areas more, you're almost certainly going to end up charging more on average to people of a race, religion, or other protected class. It might not be your intent, but the outcome will be the same.

Given the potential PR or legal problems, I'd strongly advise you not to price a product or service based on geographical regions.

lifeisstillgood4• 13 years ago

It seems that one ends up relying on the registered address of the credit card to determine if someone lives in UK and so can download the service from .co.uk

kitcar• 13 years ago

In some cases Yes. Specifically, for government regulated products such as Credit and Insurance it may be illegal to price discriminate based on Geo-IP, as the factors allowed for use in determining the pricing of the product are set by the government.

For example, I vaguely remember reading that in Quebec, Canada, you are not allowed to use people's location (postal code) when pricing banking services, for example.

fosap2• 13 years ago

Asking for different shopping fees and taxes should not be illegal anywhere.

The price itself could be more tricky. Of course it highly depends on your jurisdiction, but i some this would easily racial (or ethnical or whatever) discrimination.

Also I'm almost entirely sure that this would be a violation of the "one market" principle (and therefore illegal) of the EU if you operate from the EU and distinguishes between two EU countries.

But I'm not a lawyer or ever tried this.

lifeisstillgood4• 13 years ago

I doubt it matters enough in intra-eu terms - price discrimination based on Oregon and LA is possible (I mean cost of living is different) but hardly worth worrying about I guess

rmc• 13 years ago

I think the EU Single Market stuff only applies to laws that governments make. As someone from a small EU member state (Ireland) that's close to a large EU member state (UK), I can tell you that lots of companies, big and small, will happily sell you to the UK but not Ireland.

fosap2• 13 years ago

Oh, that should be "shipping fees"

ra• 13 years ago

Microsoft does it, Adobe does it, Apple does it. It's not illegal but that may change [1]

[1] http://www.smartcompany.com.au/information-technology/056753...

relix• 13 years ago

I think I read an ancient article from Joel Spolsky (?) about this once. Basically if you're going to charge different prices for the same product (the context was A/B testing price), you could marginally change the product so that there's no real difference, but at least they're not exactly identical. It would circumvent the question you're having if you're not sure about the legality, because they'd be different products legally. There's no law that says you can't not sell something.

If your product is software/SaaS, it's very easy to do this: allow 101 actions per month instead of 100, offer longer trial, change the colours/interface, offer longer money-back-guarantee, ... Of course be careful that these changes themselves don't skew the A/B testing.

kerenyaniv• 13 years ago

Should be legal, but as previously mentioned - you better create a product difference which will make it easier to justify the price discrimination.

ig1• 13 years ago

Yes, the standard way of doing this is via offering a localized version (with translations, local currency pricing, etc.)

Ask HN: is it legal to price discriminate based on Geo-IP

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