FTC Eyes New Rules on Surveillance Pricing Amid Backlash

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Many travelers face rising costs when booking flights online. This price jump can occur if you get interrupted and return to your search later. This practice, known as ‘surveillance pricing,’ happens when companies use your search history and personal data to adjust prices, aiming to find what they call your ‘pain point’ — the maximum price you’re willing to pay.

You might feel frustrated by these hikes, yet if you need a flight, you’ll likely book it regardless. Digital marketers rely on such consumer behavior, using tools to track your data, including cookies and pixels, to personalize your ads and experience. This practice is known as ‘friction,’ and they bet you’ll pay extra to avoid it.

Due to widespread dislike of these practices, the Federal Trade Commission (FTC) proposed a policy last week. This policy would require transparency from companies on how they use personal data for pricing. The public can comment on this proposal until September 18.

Public and Official Reactions

The majority opinion seems to oppose personalized pricing. One person noted that Amazon changed the price of a muesli brand from $34 to $54, depending on the search time. Some label this practice as ‘predatory’ and ‘devious.’

The FTC staff noted that people often don’t realize how much personal data they generate daily. This data collection allows marketers to build detailed profiles of individuals, including interests, locations, and views.

Examples Targeting Vulnerable Groups

The FTC gave examples from industry disclosures. The targeted groups included new parents who might face higher prices for baby products, people confined to their homes, and individuals needing rides to the hospital.

While the FTC can’t outright ban these practices, that’s for legislation to decide, it can still challenge companies that fail to disclose price-setting methods. This could involve cease-and-desist actions, federal lawsuits, and consumer refunds.

State Measures Against Surveillance Pricing

Maryland became the first state to restrict the use of personal data for tailoring prices in large grocery or delivery sectors. This rule will start on October 1. New Jersey followed by banning digital shelf labels suspected of adjusting prices based on user data.

California also has a bill in progress aiming to combat these practices. Assemblymember Christopher M. Ward is leading this bill. Anita Chabria, a political columnist, emphasized its importance for affordability, though lobbyists are actively opposing it. Similar legislation failed last year.

Business defenders argue the fears of an Orwellian pricing system are exaggerated. They claim data often helps provide suggestions and discounts, instead of purely boosting profits.

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