FTC Makes Moves To Stop ‘Surveillance Pricing’

The Federal Trade Commission (FTC) has recently launched an investigation into what they call “surveillance pricing,” which is a practice where companies use artificial intelligence to “charge different customers, different prices.”

What the AI is programmed to do is to determine prices based on customer data. Through this practice, customers may be charged differently for the same item based on their characteristics and behavior.

In response, the FTC is looking for information and questioning eight companies — Mastercard, JPMorgan Chase, Accenture, McKinsey, Task, Revionics, Bloomreach, and Pros — regarding their use of AI and customer data to target pricing.

In a news release, FTC Chair Lina Khan expressed concerns about privacy risks and stated that firms may be exploiting personal information to set higher prices. The investigation aims to understand how these practices impact consumer pricing and is conducted under the FTC’s authority to gather information for study.

“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.”

FTC Chair Lina Khan via the FTC

Moreover, the FTC has been addressing several headlining issues as of late.

Recently, the agency unanimously decided to block the $4 billion merger between Tempur Sealy and Mattress Firm, the largest mattress retailer in the U.S. The FTC’s decision aims to preserve competition within the mattress industry. The merger, announced by Tempur Sealy in May 2023, was seen as a move to consolidate market dominance amidst a slowing mattress market.

The FTC argued that the merger would stifle competition, potentially leading to higher prices for consumers and job losses across several states. Tempur Sealy and Mattress Firm expressed disappointment with the decision, citing anticipated benefits to consumers and the industry.