Background to Case Study
The primary objective of consumer organisations is the protection and promotion of consumer rights. Where possible, consumer organisations seek to combine efforts across countries to partner, leverage, and learn together.
Online dating platform Tinder was chosen as the subject of this case study investigation because it is a global company offering a consistent product across many countries, and because it has previously been investigated by one of Consumers International’s members in Australia, CHOICE, in 2020. An investigation into Tinder allows for a comparison of personalised pricing across a range of markets worldwide, to deliver learnings on how to build transparency effectively on a platform available globally. Tinder, an online dating platform established in 2012, is currently used by around 66 million people across 190 countries around the world. While the app is free to download, 5.9 million Tinder users pay for a premium Tinder Plus or Tinder Gold account, which offer special features, such as unlimited ‘swipes’, ‘super likes’, and ‘boosts’, designed to get your profile more attention.
When signing up to Tinder, consumers are required to share personal information from the start of the process; at no point in the registration process does Tinder draw attention to the fact that they may be offered a different price than others for Tinder Plus. Deep within the terms of use, it is noted that “Tinder operates a global business, and our pricing varies by a number of factors. We frequently offer promotional rates – which can vary based on region, length of subscription, bundle size and more’; similarly, in the privacy policy, that “we also use information about you to deliver offers and discounts tailored to your profile”.
Tinder has previously faced scrutiny for its use of personalised pricing to charge different prices to different users. In 2020, CHOICE’s study in Australia demonstrated that Tinder was not just applying different prices for different groups of consumers, but was instead using personalised pricing, applying different prices for individual consumers.
While price brackets are not officially published, representatives of Tinder have previously noted that users are also charged different prices in different countries, and for different age brackets. National media in various countries have often highlighted the existence of two price categories, usually for those aged 18-29 and 30+, and in 2019 Tinder agreed to a settlement of US$ 24 million in a class-action age discrimination lawsuit in the US state of California, alleging that people aged over 30 were being charged twice as much as younger users for its paid subscription services.
CHOICE’s 2020 study, however, suggested that Tinder was not just offering different fixed prices based on age (an example of third-degree price discrimination), but was instead quoting a wide range of personalised prices, with age explaining only a portion of this variation. There is no evidence that Tinder has changed its pricing practices in Australia since this investigation.
Case Study: Methodology
In partnership with the Mozilla Foundation, Consumer International adapted CHOICE’s methodology to conduct fieldwork in six countries – New Zealand, the USA, the Netherlands, the Republic of Korea, India, and Brazil – between May and September 2021. Together, these countries represent around 2.14 billion consumers, and cover a diverse range of geographic and socioeconomic contexts. These countries are also among the largest markets for Tinder globally.
In order to sign up, Tinder asks users to share their name, age, gender, and sexual preference, as well as to provide access to their location data. We asked the mystery shoppers to share a screenshot of the information provided upon registration, as well as their postal code, and a screenshot of the price quoted subsequently for a one-month subscription to Tinder Plus. Participants were also asked to sign up using their phone number, rather than through email or social media accounts. 96 mystery shoppers in each country took part in the study, with quotas set based on gender (50% men and 50% women); sexual preference (50% heterosexual and 50% homosexual); age (evenly split between brackets of 18-29, 30-49, and 50+); and location (approximately 70% metropolitan and 30% regional). The only exception was the Republic of Korea, where a 48-person sample consisting solely of heterosexual participants was used, due to cultural attitudes that could have placed participants identifying as homosexual at risk. These quotas were intended to ensure a diverse range of consumers were represented, rather than to achieve a representative sample of national populations.
To test consumer attitudes towards personalised pricing, we also asked these same mystery shoppers a number of survey questions about personalised pricing on online platforms more broadly. Participants were asked three questions, and asked to select all the answers that applied from a list of options. These questions were:
-
What are your main concerns with regard to online personalised pricing?
-
What do you see as the main benefits of online personalised pricing?
-
What difference, if any, would the following options make to your overall perception of personalised pricing?
In Section 4, we address some of the limitations of this study, and suggest some potential avenues for further investigation.
Case Study: Results – Prices Quoted For Tinder Plus
The wide range of prices quoted to mystery shoppers provided very strong evidence that personalised pricing is being used in all of the markets surveyed. Substantial variations in prices were observed within each country; the highest prices quoted in New Zealand, the USA, the Netherlands, and the Republic of Korea were between four and six times higher than the lowest prices in each of these countries, while in India the highest prices quoted were more than double the lowest.
A large number of different prices were quoted in five of the six countries – other than Brazil, where only two unique prices were
quoted, the survey recorded between nine (USA) and 31 (Netherlands) unique prices in each country.
There is strong evidence that age is a significant factor driving personalised pricing, with 18-29 year-olds charged substantially
less than older users in all countries except Brazil – on average across the six countries, 30-49 year-olds were charged 65.3% more
than 18-29 year-olds, while there was minimal difference between 30-49 year-olds and those aged over 50.
However, the findings also clearly demonstrate that age is not the only relevant factor, with numerous cases observed in which older users paid less than their younger compatriots.
Gender and sexual preference showed no statistically significant evidence of affecting pricing; while small variations were observed
at national level, a larger sample size would be necessary to determine the significance of any relationship.
The role of location proved more difficult to measure, given the specificity of the location data available to Tinder; however, the reasonable level of variation observed here suggests that further investigation into its role in price-setting would be highly worthwhile.
It is clear that Tinder’s price-setting mechanism is complex, drawing on age and other unknown factor/s, possibly including data points beyond those provided upon registration
Consumer Attitudes Towards Personalised Pricing
Nearly all consumers surveyed reported some level of concern regarding the use of personalised pricing; 56% cited concerns about
data privacy as a top concern, while 33% highlighted the potential unfairness of charging different prices to different people.
Participants aged over 30, who this investigation has demonstrated are routinely charged more for Tinder Plus, were nine percentage points more likely to identify the potential for price discrimination as a top concern regarding personalised pricing.
When asked about possible benefits of personalised pricing, 40% of participants cited the potential to receive lower prices as a top
benefit, while 38% cited the option for companies to tailor products and services to individual consumers’ needs.
Participants also reported that their perception of personalised pricing would be more positive if there was an option to ‘opt out’ of receiving personalised prices, or if there was greater transparency on data collection and sharing, and on the price-setting process.
Conclusion
This investigation has provided very strong evidence to support the conclusion that Tinder is applying personalised pricing in a wide range of global markets, as consumers in all six countries were charged a range of different prices, without any transparency on the price-setting mechanism, or any explicit notification during the registration process that personalised pricing was being applied at all. In five of the six countries, age was shown to be a major determinant of pricing, with older consumers generally charged more; however, in all six countries it was also clear that other factors beyond age are affecting pricing. These findings broadly match those provided by CHOICE’s 2020 investigation in Australia.
Gender and sexual preference showed no statistically significant impact on pricing, but further research would be needed to confirm that there is no unfair pricing, even unintentionally; location appeared to be more influential, but the challenges of measuring this impact again make it difficult to be certain. There is also a possibility that data points other than those provided upon registration are being used to shape prices; this would align with what our survey on consumer perceptions showed to be participants’ greatest concern – that their personal data is being collected and shared without their knowledge. The potential to be charged different prices was another concern expressed by participants, especially when linked to the possibility of discrimination, but many also recognised the potential for personalised pricing to allow some consumers to receive lower prices, if managed and regulated responsibly.