FTC Investigating Companies’ Use of Personal Data to Set Prices

The Federal Trade Commission (FTC) is looking to learn more about companies’ use of personal data to categorize individuals and set individualized prices for the same goods or service — a practice it calls “surveillance pricing.”

The regulator said in a Tuesday (July 23) press release that it sent orders seeking information from eight firms that advertise their use of technology and data to set target prices for individual consumers.

The FTC sent these orders using its 6(b) authority, which allows it to conduct wide-ranging studies that do not have a specific law enforcement purpose, according to the release.

It sent the orders to Mastercard, Revionics, Bloomreach, JPMorgan Chase, Task Software, PROS, Accenture and McKinsey & Co., per the release.

“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,” FTC Chair Lina M. Khan said in the release.

“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,” Khan added.

With its orders sent to the eight companies, the FTC aims to learn about the impact these practices could have on privacy, competition and consumer protection, according to the release.

Specifically, the orders ask about the types of surveillance pricing products and services being offered, their current and intended uses, their data sources, their customers, and their potential impact on consumers and the prices those consumers will pay, per the release.

“The FTC has long been on the front lines of documenting and investigating the hidden ecosystem of data brokers, digital platforms and other intermediaries that specialize in monitoring and selling user data,” the regulator said in the release. “The FTC’s 6(b) orders aim to shed light on how the current data ecosystem may facilitate the ability to target consumers with individual prices.”

It was reported in March that the social news aggregation and discussion website Reddit disclosed that it had received a letter from the FTC concerning its data-licensing practices related to the training of artificial intelligence (AI) systems.

The company said the FTC’s staff was conducting a non-public inquiry focused on Reddit’s sale, licensing or sharing of user-generated content with third parties for the purpose of training AI models.