The Federal Trade Commission (FTC) is launching a probe into some of the country’s largest companies, examining whether they use consumers’ personal data—including location, browsing history, and loyalty program membership—to set individualized prices.
Nine companies—Delta, United, JetBlue, Lyft, Uber, DoorDash, Instacart, Target, and Walmart—will be required to provide information on whether they vary prices from one customers to another based on personal data. None has admitted to using the practice.
Although surveillance pricing is generally legal, the FTC plans to use the findings to inform a study aimed at helping lawmakers better understand personalized pricing practices.
Conflation with Dynamic Pricing
The growing use of AI-powered dynamic pricing by some of the companies under scrutiny may be fueling concerns. Delta, in particular, has faced criticism over its use of AI to adjust ticket prices. The airline responded with a statement, saying, “Delta’s ticket prices are dictated by market dynamics and vigorous competition.”
“Demand pricing has been the norm in airlines and hotels for 50 years,” said Don Apgar, Director of Merchant Payments at Javelin Strategy & Research. “It costs more to go to Florida in January than it does in July. Uber is more complex because they have to manage the supply of drivers. If not enough drivers logged in to meet demand, raising prices incentivizes more drivers to log in so they can make more money. I don’t think there is anything nefarious afoot here.”
JetBlue faced a congressional investigation and a lawsuit earlier this year after a customer complained on X about a price increase on a bereavement fare. In response, JetBlue’s X account suggested clearing “cache and cookies or booking with an incognito window,” implying that the customer’s browsing history might be affecting the price. The airline later deleted the post and denied using surveillance pricing.
States Take Action
Some states are moving to restrict surveillance pricing. New Jersey has banned grocery stores from using the practice and paused the rollout of new electronic shelf labels for a year while it studies their potential role in enabling it.
New York has passed a law requiring businesses to disclose when they use algorithms to set prices. Maryland and Connecticut have also enacted laws aimed at protecting consumers in retail pricing and data privacy.
