The US Federal Trade Commission (FTC) has launched an investigation into "surveillance pricing," a phenomenon likely familiar to anyone who's had to buy something in an incognito browser window to avoid paying a premium. 

Surveillance pricing, according to the FTC, is the use of algorithms, AI, and other technologies - most crucially combined with personal information about shoppers like location, demographics, credit, the computer used, and browsing/shopping history - "to categorize individuals and set a targeted price for a product or service." 

In other words, the regulator is concerned about the use of software to artificially push up prices for people based on their perceived circumstances, something that incognito mode can counter by more or less cloaking your online identity.

The FTC on Tuesday ordered eight companies who offer those surveillance pricing systems to turn over information on the effect they may have on folks' pocketbooks as well as privacy and competition.

But don't mistake this for legal action - at this point it's all about "helping the FTC better understand the opaque market for [surveillance pricing] products by third-party intermediaries," the government watchdog said.  

"Firms that harvest Americans' personal data can put people's privacy at risk," FTC boss Lina Khan opined. "Now firms could be exploiting this vast trove of personal information to charge people higher prices." 

It's not exactly a secret that sellers manipulate online prices, or that consumers know about it - recommendations to shop online in an incognito browser window are plentiful and go back years.

In this case, the FTC wants to know more about how Mastercard, JPMorgan Chase, Accenture and McKinsey & Co are offering surveillance pricing products. It also wants the same information from some names you may not have heard of, like Revionics, which offers surveillance pricing services to companies like The Home Depot and Tractor Supply; Task Software, which counts McDonald's and Starbucks among its customers; PROS, which supports Nestle, DigiKey and others; and Bloomreach, which provides similar services like Williams Sonoma, Total Wine, and Virgin Experience Days. 

The FTC wants to probe what types of surveillance pricing products exist, the services they offer, how they're collecting customer data and where it's coming from, information about who they offered services to, and what sort of impacts these may have on consumers and the prices they pay. 

"Americans deserve to know whether businesses are using detailed consumer data to deploy surveillance pricing, and the FTC's inquiry will shed light on this shadowy ecosystem of pricing middlemen," Khan said. 

With the investigation being carried out under the FTC's section 6(b) authority, the matter isn't being carried out with any specific legal purpose, and is only aimed at gathering information, a Commission spokesperson told The Register. 

That said, we're also told that if the investigation suggests someone is doing something illegal the Commission can still pursue action, though that's not the intention since surveillance pricing isn't in itself against the law - yet. 

The FTC didn't answer questions about whether it was considering a prohibition on surveillance pricing.

The eight companies subject to the order have until the beginning of September to report to the FTC. As is common with section 6(b) investigations, the Commission will likely make some of its findings public, after which it's anyone's guess whether further action will be taken. ®

https://www.theregister.com//2024/07/23/ftc_surveillance_pricing/