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FTC is studying surveillance pricing and which companies use the practice

Surveillance pricing uses customer information like their home address, demographic makeup and shopping habits to determine what price to charge individuals for services or products.
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The Federal Trade Commission announced it will look into the practice of surveillance pricing to learn more about its potential impacts on privacy and consumers.

Surveillance pricing uses customer information like their home address, demographic makeup and shopping habits to categorize individuals and determine what price to charge individuals for services or products. Not to be confused with dynamic pricing, which involves actively changing the price of something based on demand and other factors.

Eight companies that offer services to track real-time customer information using artificial intelligence and other technology – Mastercard, Revionics, Bloomreach, JPMorgan Chase, Task Software, PROS, Accenture and McKinsey & Co – were sent orders to provide information about their tracking products to the FTC.

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“By examining the actors involved, their technical tactics, and the pipelines that enable surveillance pricing, the Commission aims to understand the effects that surveillance technology has on consumers, including the prices they pay and the types of personal data that are used to determine those prices,” the FTC said.

Sellers changing their prices based on who is buying is not a new practice. However, the tactic of using surveillance technology to study a consumer's habits and therefore determine prices is becoming more common, adding to concerns about privacy.

Advancements in the world of technology we now live in have made it easier for companies to harvest personal information about their consumers in larger volumes. And, in some cases, the consumer may not even know their data is being taken or used for that purpose.

Even retailers like grocery stores are starting to use algorithms to create targeted prices, the FTC said.

The agency said in addition to learning more about how companies are obtaining consumer data, it also aims to uncover which companies are using surveillance technology in their business practices.