FTC investigates companies’ use of personal data to set prices

The Federal Trade Commission (FTC) wants to learn more about how companies use personal data to categorize individuals and set individual prices for the same goods or services — a practice it calls “surveillance pricing.”

The regulator said in a press release on Tuesday (July 23) that it had sent information requests to eight companies that advertise their use of technology and data to set target prices for individual consumers.

According to the release, the FTC issued the orders under its 6(b) authority, which allows it to conduct broad investigations that do not have a specific law enforcement purpose.

According to the release, orders were sent to companies including Mastercard, Revionics, Bloomreach, JPMorgan Chase, Task Software, PROS, Accenture and McKinsey & Co.

“Companies that collect Americans’ personal data can put people’s privacy at risk. Now, companies can use this vast trove of personal data to charge people higher prices,” FTC Chairwoman Lina M. Khan said in a statement.

“Americans deserve to know whether companies are using detailed consumer data to set prices for surveillance, and the FTC’s investigation will shed light on this shady ecosystem of price intermediaries,” Khan added.

According to the release, the FTC intends to issue orders to eight companies to learn what impact these practices may have on privacy, competition and consumer protection.

According to the release, the orders ask questions about the types of surveillance pricing products and services offered, their current and planned uses, the sources of the data, the clients, and their potential impact on consumers and the prices those consumers will pay.

“The FTC has long been on the front lines of documenting and investigating the hidden ecosystem of data brokers, digital platforms, and other intermediaries that specialize in monitoring and selling user data,” the regulator said in a statement. “FTC Rule 6(b) aims to shed light on how the current data ecosystem can facilitate targeted pricing to consumers.”

In March, news aggregation and discussion site Reddit reported that it had received a letter from the FTC regarding its licensing practices for data related to training artificial intelligence (AI) systems.

The company said FTC staff are conducting a non-public investigation into whether Reddit sells, licenses or shares user-generated content with third parties for the purpose of training artificial intelligence models.