The US Federal Trade Commission is demanding information from Walmart, Uber and seven other companies about whether they use personal data to tailor prices, wages and job offers to individuals. The inquiry will support a study of personalized pricing and pay-setting practices, a senior FTC official told Reuters.
The requests also cover Target, Lyft, DoorDash, Instacart, Delta Air Lines, United Airlines and JetBlue Airways. The agency is seeking details about the use of information such as consumers’ location, browsing history and income, as well as the tools and strategies companies use to determine offers.
The study is intended to give regulators and lawmakers a clearer picture of how these systems work and how they affect shoppers and workers. The information demands do not establish that the companies have used personalized pricing or violated the law; the inquiry is examining whether and how those practices occur.
Algorithmic pricing, including systems incorporating artificial intelligence, has increased concern that businesses could estimate the highest price a particular customer would accept. The FTC’s inquiry extends beyond shopping to examine whether personal information influences the wages or job offers presented to individual workers.
Personalized pricing is distinct from prices that change for everyone in response to demand or available inventory. A fare that rises as an aircraft fills, for example, does not by itself show that an airline is using a passenger’s personal characteristics to set the price. The agency’s questions concern the role individual data plays in determining what a person is offered.
That distinction can be difficult to assess from outside a company. Shoppers may not know whether another person is seeing a different price for the same item, or whether any difference reflects timing, a broadly available promotion or information tied to them. The FTC is seeking comprehensive information about companies’ systems to address that lack of visibility.
JetBlue said it does not use personal information or browsing history to set individualized prices. It said its fares depend on demand and seat availability, and that the same fares are available to all customers through its website and mobile app. Delta said it prohibits discriminatory or predatory pricing and complies with applicable privacy, pricing and advertising laws.
The inquiry comes amid state legislative efforts to restrict personalized pricing and algorithms that tailor individual wages. The National Retail Federation has opposed such restrictions, arguing that data-driven discounts allow retailers to reward loyal customers. That debate encompasses both concerns about unequal treatment and businesses’ use of customer information to offer promotions.
FTC Chairman Andrew Ferguson has warned that personalized pricing could breach consumer protection laws when people do not reasonably expect their information to be used that way. He has also said companies should anticipate enforcement when their practices violate the law.
Hundreds of responses to an earlier FTC request for public comment called for an outright ban on personalized pricing. The agency has said it lacks authority to impose a blanket prohibition. Its planned study will instead assemble evidence about the technologies, data and effects involved to inform further regulatory and legislative consideration.
Sources: Reuters, Latest news from Azerbaijan, New York Post