The Office of Fair Trading is warning 60 leading online businesses they should be transparent about how they collect and use customer data.
A report from the watchdog found many retailers used customer information to place advertisements or decide pricing, but found no evidence that specific customers were being targeted for higher prices. (See Cheap Online Shopping for tips on buying online.)
The OFT says it found many consumers were "uneasy" with the range of information collected about them, how that data was used and what they could do about it.
It also says firms were not being clear enough about the issue, with some not offering customers the chance to opt out of having their data collected.
The watchdog's Personalised Pricing report found retailers used information to place advertisements or decide pricing, for example, to offer a discount to a consumer who clicked from a price comparison site.
'Accurate, honest and clear'
But it found no evidence to back up complaints that specific individuals had been targeted for higher prices for hotels, accomodation and transport.
The OFT says it is sharing its findings with the Information Commissioner's Office, which polices how firms use data, and reminding businesses to:
- Give consumers accurate, honest and clear details about how they, and third parties, collect and use their information.
- Give consumers a genuine chance to opt-out of non-essential collection and use of their data.
- Make sure their privacy terms and conditions are fair.
It adds it can take enforcement actions against firm who don't comply.
OFT chief executive Clive Maxwell says: "Our report found no evidence to indicate firms are using personal information to target individuals with higher prices and indeed, in some cases we found that groups of customers are benefiting from discounts.
"However our study has shown that there is clearly public concern about how personal information is being collected and used. We are therefore calling on businesses to make sure they are being fully transparent and giving consumers appropriate control.
"Maintaining consumer trust online is important to growth and innovation, and we will consider enforcement action if we see evidence of misleading or unfair practices."