In a recent press release, the FTC announced that it has issued orders to companies that offer "surveillance pricing products and services." Using its Section 6(b) authority to conduct studies without a specific law enforcement purpose, the FTC is seeking information from eight companies, including Mastercard, JPMorgan Chase, Accenture, McKinsey and others, which advertise the use of artificial intelligence and other technologies, along with other customer information, in order to target prices for individual consumers.
As noted in the Concurring Statement of Commission Ferguson, "the use of personal data to charge different consumers different prices for the same product...is ancient and commonplace" in some industries, like insurance and credit, but "the massive trove of personal data we generate online has made it possible for merchants to personalize prices for goods that Americans would not usually expect to vary from person to person." Am I paying more for my labradoodle's kibble than my neighbors are paying for their dogs' chow because of what data brokers know about my excessive canine spending habits? The FTC wants to know.
The stated purpose of this investigation is "to reveal, rather than to remedy" and "is aimed at helping the FTC better understand how surveillance pricing is affecting consumers." However, as noted by Commissioner Ferguson, "[e]ven if this practice does not violate any existing law, consumers may well see personalized pricing as unfair or even manipulative, and it may undermine their trust in the digital marketplace." The fact that the FTC is characterizing the practice as "surveillance" may indeed provide us a clue of its view of it.
The orders are seeking very technical information from these intermediary companies in four major areas: the types of surveillance products and services each company offers to other companies; the data sources for these products and services; the companies to whom these products and services are offered and their intended use of them; and information on the potential impact of these products and services on "surveilled consumers," including the prices they pay.
It's likely to be a good long while before we find out what the FTC learns through this process. But it seems equally likely that the information the FTC acquires could have a major impact on privacy, competition, and consumer protection priorities and enforcement in the coming years.
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