US FTC calls out ‘surveillance pricing’ says companies using browser history, shopping patterns to manipulate prices

A United States Federal Trade Commission’s (FTC) study has found that more than 250 companies used location, demographics, browser history and shopping patterns to target individual consumers with different prices for the same goods and services.

These businesses, include apparel, beauty retailers, building and hardware stores, convenience stores, department and discount stores, grocery stores, and health retailers, among others.

The market study based on an examination of documents obtained by FTC staff’s in July aimed to better understand the shadowy market that third-party intermediaries use to set individualised prices for products and services. In an official release on January 17, the FTC called this practice “surveillance pricing”.

“Staff found that consumer behaviors ranging from mouse movements on a webpage to the type of products that consumers leave unpurchased in an online shopping cart can be tracked and used by retailers to tailor consumer pricing,” the statement noted.

Companies Using Personal Data

“Initial staff findings show that retailers frequently use people’s personal information to set targeted, tailored prices for goods and services—from a person's location and demographics, down to their mouse movements on a webpage,” FTC Chair Lina M Khan said in the statement.

She added, “The FTC should continue to investigate surveillance pricing practices because Americans deserve to know how their private data is being used to set the prices they pay and whether firms are charging different people different prices for the same good or service.”

How Was The Study Conducted?

The FTC’s study is still ongoing, according to the release. The perspective is based on an initial analysis of documents provided by Mastercard, Accenture, PROS, Bloomreach, Revionics and McKinsey & Co.

The study focused on intermediary firms — which act has hired middlemen by retailers to algorithmically tweak and target their prices. “Instead of a price or promotion being a static feature of a product, the same product could have a different price or promotion based on a variety of inputs—including consumer-related data and their behaviors and preferences, the location, time, and channels by which a consumer buys the product, according to the perspective,” the statement added.

FTC said information from the study will be released once all data has been aggregated or anonymised to protect confidential trade secrets from respondents.

Republicans Dissent on Publicising Findings

According to a Bloomberg report, the FTC’s three Democrats voted in favor of releasing the early findings this week, while the regulator’s two Republicans dissented.

In a written dissent, Republican Commissioner Andrew Ferguson, who is set to become chair next week after President-elect Donald Trump’s inauguration, criticised the decision to release the early version of the study saying that “issuing these research summaries degrades the commission’s Section 6(b) process.”

“The commission should not be releasing staff’s early impressions that ‘can be outdated with new information’ because the fact gathering process on the very issues being presented to the public is still underway,” he said.

(With inputs from Bloomberg)