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The US Federal Trade Commission (FTC) has launched an investigation into eight companies suspected of using surveillance pricing practices.
The targeted firms — Mastercard, Revionics, Bloomreach, JPMorgan Chase, Task Software, PROS, Accenture and McKinsey & Co. — are under scrutiny for their use of personal data, including financial and browsing history, to set individualised prices for goods and services.
The FTC orders aim to uncover the impact of these pricing strategies on consumer privacy, competition and overall consumer protection.
The focus is on understanding how third-party intermediaries employ advanced algorithms, artificial intelligence and personal data points such as location, demographics and credit history to tailor prices for individual consumers.
FTC chair Lina M. Khan emphasised the potential risks, : "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.”
Khan added that Americans deserve to know whether businesses are using detailed consumer data to deploy surveillance pricing, saying: “The FTC’s inquiry will shed light on this shadowy ecosystem of pricing middlemen."
The investigation utilises the FTC's 6(b) authority, which allows for comprehensive studies without a specific law enforcement purpose.
The commission is looking for detailed information in four key areas: the types of surveillance pricing products and services offered; the data sources and collection methods used; the customers and sales information for these products; and the potential impacts on consumers and pricing.
The investigation is part of the FTC’s ongoing efforts to document and investigate the hidden ecosystem of data brokers and digital platforms that specialise in monitoring and selling user data, and the commission's goal is to clarify how this data ecosystem may enable targeted pricing strategies.
A unanimous decision
The FTC's decision to issue these orders was unanimous, the regulator confirmed, and commissioners Melissa Holyoak and Andrew N. Ferguson both issued concurring statements.
“A report on these issues may provide valuable insight about data practices to the public, to the commission as it pursues enforcement actions, and to Congress as it considers privacy legislation,” said Holyoak’s .
However, Holyoak also highlighted two concerns. First, she cautioned against the use of the term "surveillance pricing" due to its negative connotations, which might unfairly suggest that personalised pricing is inherently bad.
Rather, she advocated for neutral terminology to avoid prejudgment.
Second, she emphasised the importance of not letting the new study delay the completion of the ongoing study on pharmacy benefit managers (PBMs), which was initiated years ago.
Holyoak stressed that resources should be allocated to finish the PBM study promptly, as promised during a recent congressional hearing on the commission's 2025 budget.
Inappropriate personalisation
Ferguson said personalised pricing “involves the use of personal data to charge different consumers different prices for the same product”.
“This practice is ancient and commonplace for many products and services. The prices of insurance policies or of credit, for example, necessarily turn on a consumer’s personal details because the price must reflect the risk of providing the good or service to the consumer,” he said.
However, he pointed out that the “the massive trove of personal data we generate online has made it possible for merchants to personalise prices for goods that Americans would not usually expect to vary from person to person”.
Meanwhile, he that the orders issued for the 6(b) study are not part of an enforcement action and are not contingent on uncovering illegal conduct, adding that Congress has tasked the FTC with studying markets and reporting findings, with the primary aim being to reveal information rather than to remedy issues.
Ferguson also echoed Holyoak regarding the need to conclude the ongoing PBM study promptly and suggested legal action if compliance is delayed.
He said that neither the PBM study nor the new personalised pricing study strains resources, as these investigations align with congressional directives.
Instead, he critiqued the volume and pace of rulemaking by the commission’s majority, which he believes is a more significant drain on resources and often involves unlawful rules.
“Technology moves faster than the government. There is no time to delay a study on personalised pricing if we hope to investigate the practice at its nascency — or, if the practice is already pervasive, to catch up on it,” he said.
Ferguson continued that Congress and the American people should be made aware of whether and how consumers’ private data may be used to affect their pocketbooks. “Even if this practice does not violate any existing law, consumers may well see personalised pricing as unfair or even manipulative, and it may undermine their trust in the digital marketplace.”
Similarly, he suggested that Congress and state legislatures will value the results of this study as they consider changes to privacy laws in the US.
