Yves here. It’s encouraging to see Lina Khan at the FTC launch a new front investigating companies abusing their market power by using consumer behavior profiles to price discriminate. The FTC appears to be relying on multiple types of consumer protections to make this case. Kudos to the FTC for inventing the brand “surveillance pricing” here.
Keep in mind that vendors have been doing this kind of thing for a very long time, and the leaders are the airlines. I regularly and frustratingly experience Delta raising the price when I search for a specific city pair and dates, then search again for the same trip just a day later. Clearing cookies did not solve the problem.
I was able to get around this annoying practice by using a VPN set up outside the US (which resulted in Delta wanting me to issue the ticket in a foreign currency, which I had to ignore), and while less extreme methods probably would have worked, this method was usually successful.
A well-known example of how airlines use detailed information to inflate prices is by showing higher fares to presumably wealthier Apple users or searches from more affluent neighborhoods.
I suspect, but cannot prove, that the FTC’s attention to this issue is in part due to the recent reports of apparent price collusion cases — nationwide rent-fixing cartels — that have led to sweeping legal action. As Conor Gallagher wrote in June::
RealPage, a private equity-owned company that develops software programs for property management, has been the subject of lawsuits and investigations by multiple state attorneys general, a national class action lawsuit, a Department of Justice criminal investigation and, most recently, a possible FBI investigation in Atlanta, has finally responded to allegations that it orchestrated a nationwide rent-fixing cartel that caused rent prices to skyrocket.
Texas-based RealPage is accused of acting as an information-sharing middleman for the big real estate rental giants. Lawsuits against the company and major property management companies (1) allege that the big property management companies agreed to pricing through RealPage’s software, which also allowed the two companies to share data on vacancy rates and prices in many of the most expensive markets in the United States.
True, RealPage was sharing property-level information, but this raises troubling questions about the many other forms of information that companies buy or share to gain a huge advantage over hapless consumers. So even if this case didn’t directly trigger FTC action, it’s likely it would have risen to the top of the agency’s priority list.
I may be overly optimistic. I think it’s almost certain that Lina Khan would stay on at the FTC as part of a Harris administration, since she’s one of the few agencies the Democrats can boast about. It’s unlikely, but I don’t think it’s impossible that the Trump administration could keep her. Trump (and perhaps even more so) Vance tends to take a populist stance. They also aren’t as connected to Silicon Valley and big finance as the Biden team… but they picked Khan nonetheless.
By Common Dreams staff writer Edward Carver. A common dream
The Federal Trade Commission on Tuesday launched an investigation into surveillance pricing, requesting information from eight companies about the practice.
The FTC inquiry We consider the impact of surveillance pricing, which uses data on consumer behavior and characteristics to manipulate prices for individual consumers, on privacy, competition, and consumer protection.
The authorities told MasterCard, JPMorgan ChaseWe obtained information about this work from , Accenture, McKinsey, and four lesser known firms that serve large corporations.
“Companies that collect Americans’ personal data could put people’s privacy at risk,” FTC Chairman says Lina Khan “Companies could exploit this vast trove of personal information to charge higher prices,” it said in a statement.
“Americans have a right to know whether companies are using detailed consumer data to engage in surveillance pricing, and the FTC’s investigation will shed light on this dark ecosystem of price-fixing middlemen,” she added.
1. Companies are collecting reams of personal data on Americans, from your browsing history to your biometrics. Now companies can use this data to target individual prices to you.
today @FTC It has launched an investigation into these surveillance pricing tactics. https://t.co/G4uc8lHWOV
— Lina Khan (@linakhanFTC) July 23, 2024
Progressive advocacy groups, who have long seen Khan as one of Biden’s strongest allies in the administration and have argued that discriminatory pricing is unfair, welcomed the FTC’s announcement.
“We’re excited to see the FTC crack down on the dystopian practice of surveillance pricing,” said Lee Hepner, legal counsel for the Project on American Economic Freedom. statement“It’s terrifying to think that companies could have so much control over our lives that they could use the personal data they collect (location, demographics, shopping history, etc.) to change our habits and inflate the prices of essential goods. But it’s already happening.”
Groundwork Collaborative Executive Director Lindsay Owens also praised the FTC’s action. caveat “Personalized pricing may sound good, but in reality it’s a three-pronged corporate strategy to surveil customers, isolate customers, and overcharge them.”
“Today’s investigation is an important step in cracking down on the tactics big companies use to spy on and deceive consumers,” Owens said. statement.
Emily Peterson Cashin, director of the Demand Progress Educational Fund, said in a statement that Tuesday’s announcement “is another powerful sign that the FTC is fighting for consumer power over corporate power.”
Zephyr Teachout, a Fordham University law professor who has been at the forefront of the anti-surveillance pricing movement, offered an excited response Tuesday.
“Wow!” she said. I have written On social media, one person wrote, “The FTC is on its way there! So excited to see the FTC launch a full investigation into how companies use data to offer different prices to different people! We know the incentives and the ability are there, but the reality of surveillance pricing is a triple-locked black box!”
Proponents of monitory pricing call it personalized pricing, and argue that it allocates resources efficiently. Such pricing issues have attracted considerable interest from business school scholars, especially among elite institutions. Massachusetts Institute of Technology and Harvard UniversityDetailed article in American Outlook last month.
A crackdown on this practice is likely to be supported across the political spectrum. CNBC —One A frequent and vocal critic A representative for Khan praised the FTC’s announcement on air Tuesday but expressed disbelief that he was doing so.
7/ Even Jim Cramer I agree that surveillance pricing is not an honest and ethical way to treat customers.
“If you’re a company that’s adopting this strategy, how do you reconcile yourself?” he asked this morning.
“This is a great report. I agree.@FTC)” pic.twitter.com/23HEDk8Yqf
— American Economic Freedom Project (@econliberties) July 23, 2024
All five FTC commissioners, including two Republicans, voted in favor of moving forward with the investigation, which will focus on intermediaries, which the FTC said “allow companies to algorithmically tweak and target prices.” Blog Post The FTC also made the announcement on Tuesday.
The requests for information are not an indication that the eight companies have engaged in wrongdoing, but rather that they may be useful sources of information, said an FTC official, speaking on condition of anonymity. SaidThe Hill.
