Global: FTC Investigates ‘Surveillance Pricing’ Practices Using Customer Data

The Federal Trade Commission (FTC) has launched an investigation into how companies, including Mastercard and JPMorgan Chase, utilize artificial intelligence (AI) and personal data to implement “surveillance pricing” strategies, which involve setting different prices for different customers based on their data.

The FTC has issued orders to eight firms that provide these surveillance pricing products and services, seeking detailed information on how they incorporate data about consumers’ characteristics and behaviors.

Understanding Surveillance Pricing

The FTC aims to gain insight into the “opaque market” where algorithms and AI, combined with personal information such as location, demographics, credit history, and browsing or shopping history, are used to categorize individuals and set targeted prices for products or services.

FTC Chair Lina M. Khan expressed concern over the potential risks to privacy and fairness, stating, “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. 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.”

Companies Under Scrutiny

The orders have been sent to the following companies: Mastercard, Revionics, Bloomreach, JPMorgan Chase, Task Software, PROS, Accenture, and McKinsey & Co. These companies are required to provide information on:

• The types of surveillance pricing products and services they have developed.
• The data sources used to inform these pricing strategies.
• The clients to whom these products and services were offered and the intended use of these products.
• The impacts of these surveillance pricing practices on consumers and prices.

Implications for Consumers

This investigation highlights the FTC’s commitment to ensuring transparency and fairness in pricing practices that leverage consumer data. The outcome of this inquiry could have significant implications for how companies use personal data in pricing strategies, potentially leading to stricter regulations and greater consumer protections.

By investigating these practices, the FTC seeks to hold companies accountable for how they use consumer data and ensure that pricing practices do not unfairly exploit personal information to the detriment of consumers.