The Trouble with Surveillance Pricing

The much-discussed subject of algorithmic pricing (also known as surveillance pricing) has come under scrutiny by the U.S. Federal Trade Commission. The FCC is demanding that nine companies – Delta, United, JetBlue, Lyft, Uber, DoorDash, Instacart, Target and Walmart – explain why consumers are charged different prices for identical goods or services.

Meanwhile, a slew of recent lawsuits has alleged that companies are arriving at prices based on consumers’ buying histories or personal data.

“We intend to scrutinize the opaque methodology that some companies in these industries may be using to determine how much consumers pay or how much gig workers are paid for the same product or service,” said FTC Chairman Andrew N. Ferguson, in an October 28 press release. “Consumers deserve to know whether companies use their web surfing habits or other personal data to estimate the highest price they can charge each consumer. Workers also deserve to know if their compensation is affected by how companies use their personal data.”

Each company must turn over information that will allow the agency to assess whether the pricing for a ticket, ride share, food delivery or other product or service varies from one person to the next based on factors such as participation in loyalty programs or analysis of personal data by superintelligence algorithms, the FCC said. If a company fails to turn over the required information, the Commission has the power to compel compliance in federal court.

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