The Federal Trade Commission (FTC) on July 23 ordered eight companies to provide detailed information about their “targeted” or “personalized” pricing — that is, pricing based on individualized consumer data.
“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 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 — which issued orders to Mastercard, Revionics, Bloomreach, JPMorgan Chase, Task Software, PROS, Accenture, and McKinsey & Co. — wants to know what potential impact their surveillance pricing products and services have on privacy, competition, and consumer protection.
The FTC said its inquiry will also help the commission better understand the market for products offered by third-party intermediaries that claim to use advanced algorithms, artificial intelligence (AI), 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 FTC voted 5-0 to issue the orders to the eight companies under its 6(b) authority, which authorizes the commission to conduct wide-ranging studies that do not have a specific law enforcement purpose. The commission said it’s gathering information from these firms because they advertise their use of AI and other technologies along with historical and real-time customer information to target prices for individual consumers.
The FTC orders seek information on four major areas: the types of products and services being offered, data collection and inputs, customer and sales information, and the impacts on consumers and prices.
“I support issuing these orders, which seek information and documents that may reveal more about the behind-the-scenes work of data brokers and other data intermediaries,” wrote Commissioner Melissa Holyoak in her concurring statement. “A report on these issues may provide valuable insight about data practices to the public, to the commission as it pursues enforcement actions, and to Congress as it considers privacy legislation.”