FTC: Companies Are Using Your Data to Set Individualized Prices

Your personal data, including your precise location, browser history, and even your mouse movements, is being used by some companies to charge you personalized prices, according to a new FTC report.

The FTC’s study focuses on what it calls “intermediary firms,” which are the middlemen hired by retailers to use algorithms to tweak and target their prices.

This means that instead of the price of a product being static, the same product could have a different price or promotion depending on a consumer’s data, including the location, time, and channels by which the consumer buys the product.

For example, the FTC says that a consumer profiled as a new parent may intentionally be shown higher-priced baby thermometers on the first page of their search results. It also says many of the firms it examined have the ability to offer individualized and different pricing and discounts based on “granular consumer data,” such as a cosmetics company targeting promotions to specific skin types and tones.

The FTC staff found that these intermediaries worked with at least 250 clients that sell goods or services ranging from grocery stores to apparel retailers, concluding that widespread adoption of this practice “may fundamentally upend how consumers buy products and how companies compete.” The findings were derived from documents provided by some of America’s best-known companies, including Mastercard, consulting firms Accenture and McKinsey & Co.

FTC Chair Lina M. Khan said: “The FTC should continue to investigate surveillance pricing practices because Americans deserve to know how their private data is being used to set the prices they pay and whether firms are charging different people different prices for the same good or service.”

Knowledge about the existence of individualized pricing has been around for years. For example, travel influencers have long advised people to use VPNs to switch their location to low-income countries to try and get cheaper prices for international flights.

The FTC said it is continuing to research the topic and has put out a request for public comment on consumers’ experiences with surveillance pricing. It also asks for comments from businesses about whether surveillance pricing tools can give competitors an unfair advantage.

Plenty of third-party research has already been carried out on the potential economic impact of personalized pricing on consumers. A paper by Yale economics professor Jidong Zhou found that this type of individualized pricing can lower prices for consumers in some cases, but when large companies monopolize significant amounts of data, it could lead to unfair pricing.

About Will McCurdy

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I’m a reporter covering weekend news. Before joining PCMag in 2024, I picked up bylines in BBC News, The Guardian, The Times of London, The Daily Beast, Vice, Slate, Fast Company, The Evening Standard, The i, TechRadar, and Decrypt Media.

I’ve been a PC gamer since you had to install games from multiple CD-ROMs by hand. As a reporter, I’m passionate about the intersection of tech and human lives. I’ve covered everything from crypto scandals to the art world, as well as conspiracy theories, UK politics, and Russia and foreign affairs.

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