The advent of massive-scale data harvesting has resulted in the growing use of “surveillance pricing” by companies that aim to extract the maximum price that each customer will pay for a good or service. Advertisers collect or purchase data about your age, location, shopping habits, purchase history, income, outstanding debt, proximity to brick-and-mortar competitors, and even how long you looked at the ads while scrolling on your phone. They then use that information to determine exactly how much you are willing to pay for that bottle of laundry detergent, box of diapers, or bag of flour.
Today, the Center and the National Consumers League filed a comment on behalf of 27 nonprofit organizations addressing the Federal Trade Commission’s (FTC) Proposed Enforcement Policy Statement Regarding Personalized Pricing. The FTC issued the policy statement in response to a petition last spring that the Center also supported with a comment
The current comment endorses the FTC’s position that undisclosedsurveillance pricing – which the FTC calls “personalized pricing” – is likely unfair or deceptive, and urges the FTC to go beyond merely requiring disclosure. Specifically, the comment calls on the FTC to prohibit personalized pricing in the many scenarios where disclosure alone would not adequately protect consumers, to prohibit uses of personalized pricing that violate federal and state anti-discrimination law, and to underscore the applicability of protections under the Fair Credit Reporting Act (FCRA) (e.g., consumer data access and dispute rights). The comment, drafted in part by ace Center Fellow Julia Adams, also explains why the FTC should remove language from the policy statement disclaiming the agency’s own authority to prohibit personalized pricing.
The alarming use cases of surveillance pricing that the Commission’s proposed policy statement highlights demonstrate the insufficiency of a disclosure-only regime:
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A rideshare company charging a user more for transport to a medical facility on the basis of data suggesting that the user has a life-threatening medical emergency.
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A retailer charging more for a home-security camera system based on court filings indicating a particular customer has recently been the victim of a crime.
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A retailer charging more for a product sold on its website on the basis of data revealing that the consumer is inside one of the retailer’s physical locations or parking lots at the time of browsing the retailer’s website.
Merely disclosing these uses of personalized pricing would not cure the fundamental unfairness or deception they exemplify.
The comment commends the Commission for taking on this important issue and expressing its misgivings about the potential negative impact on consumers. We look forward to a final policy statement that is better suited to addressing the risks and harms the proposal identifies.
The comment was drafted by National Consumers League, with significant contributions from the Center, the National Consumer Law Center, and Truth in Advertising (TINA.org). It was filed on behalf of those three organizations and 24 other consumer advocacy organizations, including seven CLASS Network chapters.
For more information and detail on surveillance pricing, you can watch the Symposium on Surveillance Prices and Wages convened last spring by the Center and the California Law Review.