The Federal Trade Commission (FTC) has issued orders to eight companies that offer surveillance pricing products and services incorporating data about consumers' characteristics and behavior. The FTC seeks information on the potential impact of these practices on privacy, competition, and consumer protection.
The orders aim to help the FTC better understand the opaque market for products by third-party intermediaries that use advanced algorithms, artificial intelligence, and other technologies. These technologies utilize personal information about consumers—such as location, demographics, credit history, and browsing or shopping history—to categorize individuals and set targeted prices for products or services. The study focuses on understanding how surveillance pricing affects consumers, especially when based on personal characteristics and behavior.
"Firms that harvest Americans’ personal data can put people’s privacy at risk. Now firms could be exploiting this vast trove of personal information to charge people higher prices," said FTC Chair Lina M. Khan. "Americans deserve to know whether businesses are using detailed consumer data to deploy surveillance pricing, and the FTC’s inquiry will shed light on this shadowy ecosystem of pricing middlemen."
The FTC is utilizing its 6(b) authority, which authorizes the Commission to conduct wide-ranging studies without a specific law enforcement purpose, to obtain information from eight firms advertising their use of AI and other technologies along with historical and real-time customer information to target prices for individual consumers. The orders were sent to Mastercard, Revionics, Bloomreach, JPMorgan Chase, Task Software, PROS, Accenture, and McKinsey & Co.
The orders seek information in four major areas:
1. Types of products and services being offered: Details about the types of surveillance pricing products and services each company has produced, developed or licensed to a third party; technical implementation; current uses; and intended uses.
2. Data collection and inputs: Information on data sources used for each product or service; data collection methods; platforms used for data collection; and whether data is collected by other parties.
3. Customer and sales information: Information about whom the products and services were offered to and what those customers planned to do with them.
4. Impacts on consumers and prices: Information on the potential impact of these products and services on surveilled consumers including the prices they pay.
The FTC has long been involved in documenting and investigating the hidden ecosystem of data brokers, digital platforms, and other intermediaries specializing in monitoring and selling user data. The 6(b) orders aim to illuminate how the current data ecosystem may facilitate targeting consumers with individual prices.
The Commission voted 5-0 to issue the 6(b) orders to the eight companies. Commissioners Melissa Holyoak and Andrew N. Ferguson issued concurring statements.
The Federal Trade Commission works to promote competition while protecting and educating consumers. The FTC does not demand money or make threats but provides resources online at ReportFraud.ftc.gov for reporting scams, frauds, or bad business practices.
