Privacy & Information Security Law Blog

On July 23, 2024, the Federal Trade Commission announced that it had launched a study of eight companies’ “surveillance pricing” practices. According to the FTC, “the orders are aimed at helping the FTC better understand the opaque market for products by third-party intermediaries that claim to use advanced algorithms, artificial intelligence and other technologies, along with personal information about consumers—such as their location, demographics, credit history, and browsing or shopping history—to categorize individuals and set a targeted price for a product or service.”

Specifically, the FTC is seeking detailed information from eight entities about how the companies’ “User Segmentation” and “Targeted Pricing” solutions work, including the types of data used for their algorithms and from where the data is sourced. The FTC also is seeking information on which companies use these pricing technologies as part of their business. The FTC intends to use the requested information to develop a study on the development and deployment of consumer pricing products and services.

FTC Commissioners Holyoak and Ferguson issued separate concurring statements in connection with the agency’s announcement. Commissioner Holyoak expressed her concern with the FTC’s use of the term “surveillance,” stating, that the term’s “negative connotations may suggest that personalized pricing is necessarily a nefarious practice,” and that the FTC “should be careful to use neutral terminology that does not suggest any prejudgment of difficult issues.” She also indicated that she did not want any new study—on any subject—to impede completion of a long-awaited final study on pharmacy benefit managers, launched years ago. Commissioner Ferguson expressed frustration that the FTC’s “incredible volume of rulemaking the majority has undertaken” has been a drain on the agency’s resources and has been “misplaced.”