

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

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.<p>So if I sell a online service to Tunisians and Japanese, could I set a different price based on Geo-IP?
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ignostic
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...](http://en.wikipedia.org/wiki/Economic_discrimination#Discrimination_based_on_price)

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](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.

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lifeisstillgood
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

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fosap
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.

~~~
rmc
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.

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patio11
Ask a simple question, get a simple answer: not illegal. It may or may not be
wise operationally.

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jeffmould
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...](http://online.wsj.com/article/SB10001424127887323777204578189391813881534.html)

~~~
lifeisstillgood
Thank you. On the reading list

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relix
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.

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kitcar
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.

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ra
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...](http://www.smartcompany.com.au/information-
technology/056753-australian-it-pricing-inquiry-report-recommendations.html)

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

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ig1
Yes, the standard way of doing this is via offering a localized version (with
translations, local currency pricing, etc.)

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aresant
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...](http://www.conversionvoodoo.com/blog/2010/11/do-different-web-browsers-
bring-different-demographics/)

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lifeisstillgood
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"?

