The Federal Trade Commission issued orders to eight companies offering surveillance pricing products and services that incorporate data about consumers’ characteristics and behavior. The orders seek information about the potential impact these practices have on privacy, competition, and consumer protection.
The orders are aimed at helping the FTC better understand the market for products by third-party intermediaries that claim to use advanced algorithms, artificial intelligence, and other technologies, along with personal information about consumers—such as their location, demographics, credit history, and browsing or shopping history—to categorize individuals and set a targeted price for a product or service. The study is aimed at helping the FTC better understand how surveillance pricing is affecting consumers, especially when the pricing is based on surveillance of an individual’s 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 using its 6(b) authority, which authorizes the Commission to conduct wide-ranging studies that do not have a specific law enforcement purpose, to obtain information from eight firms that advertise 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.
Task Software boasts clients McDonald’s and Starbucks; Revionics works with Home Depot, Tractor Supply, and Hannaford; and Bloomreach works with FreshDirect, Total Wine, and Puma.
The orders are seeking information on four major areas:
- Types of products and services being offered: The types of surveillance pricing products and services that each company has produced, developed, or licensed to a third party, as well as details about the technical implementation and current and intended uses of this technology.
- Data collection and inputs: Information on the data sources used for each product or service, including the data collection methods for each data source, the platforms and methods that were used to collect such data, and whether that data is collected by other parties (such as other companies or other third parties).
- Customer and sales information: Information about whom the products and services were offered to and what those customers planned to do with those products or services.
- Impacts on consumers and prices: Information on the potential impact of these products and services on surveilled consumers including the prices they pay.