FTC says retailers use consumer data for 'surveillance' pricing
Published in Business News
Major retailers can tailor prices based on customer data including location, demographics or shopping history, the U.S. Federal Trade Commission said in initial study findings, raising concerns about the use of what they termed “surveillance pricing.”
The FTC found that as many as 250 different businesses, including grocery stores, apparel, health and beauty retailers, convenience stores, building and hardware stores, and department and discount stores, use consumer information to help target prices, profile consumers or rank products that are shown to shoppers. Companies most often said they were using the tools to boost revenue by increasing sales volumes, and they are used both online and in-store, the FTC said.
The FTC released initial findings of the study on Friday, the final working day of the Biden administration. The FTC’s three Democrats voted in favor of the action while the agency’s two Republicans dissented.
“Retailers frequently use people’s personal information to set targeted, tailored prices for goods and services — from a person’s location and demographics, down to their mouse movements on a webpage,” outgoing FTC Chair Lina Khan said in a statement.
The antitrust and consumer protection agency is conducting the inquiry under its so-called 6(b) authority that allows it to issue subpoenas to conduct market studies. The agency generally issues a report on its findings after analyzing the information from companies, though that process can take years to complete.
In a written dissent, Republican Commissioner Andrew Ferguson, who is set to become chair next week after President-elect Donald Trump’s inauguration, criticized the decision to release the early version of the study saying that “issuing these research summaries degrades the commission’s Section 6(b) process.”
“The commission should not be releasing staff’s early impressions that ‘can be outdated with new information’ because the fact gathering process on the very issues being presented to the public is still underway,” he said.
Units of Mastercard Inc., McKinsey & Co. and four other companies responded to the FTC’s information demands about what pricing products they offer, the data they collect and how it’s used to target which consumers receive offers, the FTC said.
While other companies involved in the study aren’t well-known, many of their clients are household brands. PROS Holdings Inc. and Revionics, a portfolio company of Goldman Sachs Asset Management’s private equity business are also among the companies that turned over information to the FTC.
PROS clients include Deutsche Lufthansa AG and Nestle SA. Revionics says it works mainly with retailers such as Home Depot Inc., and Bloomreach with home and apparel retailers including Kirkland’s Inc.
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