Have you ever noticed a sudden jump in flight prices after searching online? Perhaps you’ve experienced skyrocketing costs for hotels or rental cars after booking a flight. This is called ‘surveillance pricing,’ a tactic where companies utilize your search history and personal data to guess your needs and raise prices accordingly. Marketers call your limit the ‘pain point’—the price you’re unwilling to pay.
While it may be frustrating, if you need the flight, you’re likely to pay the price. Some may think clearing browser history or changing websites could help, but those actions take time, and marketers bet you’ll pay to avoid extra hassle, termed ‘friction.’
The Federal Trade Commission (FTC) finds these practices so widespread and unpopular that they proposed an enforcement policy. This policy would require companies to disclose when personal information is used to set prices, detailing the types of data utilized. Public comments on the proposal are invited until September 18.
Surveillance pricing is seen as predatory and devious by many.
Comments submitted for the FTC proposal reflect opposition to personalized pricing. One example includes a consumer noting Amazon’s muesli price changed from $34 to $54 based on search timing.
The FTC staff highlights that most Americans are unaware of how much data they generate and how marketers use this information. Every piece of data can create a detailed portrait encompassing interests, locations, credit history, medical conditions, and more.
Targeting Vulnerable Consumers
FTC staff shared examples from industry disclosures to illustrate pricing tactics deserving enforcement focus. These include raising costs for baby products targeting new parents, charging home-bound individuals more for food delivery, and increasing rideshare prices in emergencies.
Though the FTC can’t outright ban such practices, new legislation would be required for that step. The commission can act against non-disclosure by issuing cease-and-desist orders or suing companies, potentially resulting in refunds for affected consumers.
State-Level Action
While the FTC proposal navigates public comments, states like Maryland and New Jersey take proactive measures. Maryland’s law, effective October 1, prevents large groceries from using personal data to set prices. New Jersey goes further, restricting electronic shelf labels that could adjust prices based on phone data.
Assemblymember Christopher M. Ward pushes for similar legislation in California after a previous attempt failed. Despite arguments from business groups that surveillance pricing concerns are exaggerated, critics aren’t convinced.
Further Developments
In related news, California sues to block USPS mail voter rules overseen by President Trump. Also, potential showers in Southern California may intensify current humidity levels as the area recovers from a heat wave.
These efforts, paired with technological advancements in areas like AI education, indicate ongoing shifts in how data influences business practices and consumer protection.