The Federal Trade Commission (FTC) has initiated an inquiry into the use of surveillance pricing practices by firms. This practice involves collecting detailed consumer data to adjust prices based on individual characteristics, such as location, shopping habits, and web browsing history.
Historically, sellers have tailored prices based on customer information. The advent of technology has significantly enhanced this capability. Early market research tools like "Audimeters" collected data from consumers who willingly participated in research by attaching these devices to their radios or TVs.
In contrast, modern data collection is pervasive across various devices, often without consumers' active awareness. This data can now be used to implement surveillance pricing for a wide range of products and services.
Recent reports suggest that grocery stores and retailers are increasingly using algorithms to set targeted prices. Advances in machine learning have made it more cost-effective to process large volumes of personal data, potentially leading to price adjustments based on precise consumer information.
The FTC's study under its 6(b) authority aims to understand how surveillance pricing operates, including the types of data used and their sources. The focus will be on intermediary firms that enable algorithmic price adjustments. By examining these entities and their methods, the FTC seeks to assess the impact of surveillance technology on consumers.
This investigation continues the FTC's long-standing efforts to monitor evolving markets and apply existing laws to new technologies affecting consumers or competition. The agency has previously taken action against unauthorized use of personal data by companies operating as intermediaries in the technology stack.
The FTC has highlighted potential misuse of sensitive information in cases involving digital health platforms like GoodRx and BetterHelp, which allegedly shared patients' health information with third-party advertisers using tracking pixels.
As surveillance technology increasingly influences pricing strategies, the FTC aims to shed light on this practice and its implications for consumers.
