Understanding Surveillance Pricing
Have you experienced browsing flights online only to see the prices rise dramatically upon returning later? This phenomenon is known as surveillance pricing. Companies monitor your search history and use personal data to estimate your desires or needs, inflating prices to discover what marketers describe as your personal ‘pain point’—the maximum you are willing to pay. You might find it irksome, but necessity often overrides annoyance when booking a flight.
Digital Surveillance and Consumer Friction
These digital practices have become widespread and unpopular. Marketers assume you will pay extra to circumvent inconvenience, recognized as ‘friction’ in marketing terms. Despite clearing browser history or beginning anew on another platform, your time holds value.
Federal Trade Commission’s Proposal
In response, last week the Federal Trade Commission (FTC) introduced a potential policy requiring firms to reveal when utilizing intricate personal data to set individual prices. Companies would also need to specify what type of information they use. Public feedback on this policy is open until September 18.
A growing number of comments express opposition towards personalized pricing.
One user reported that Amazon adjusted the price of preferred muesli from $34 to $54, appearing to depend on search timing. Others labelled surveillance pricing as ‘predatory’ and ‘devious.’
Commission’s Concerns and Hypothetical Examples
FTC staff affirmed many Americans are unaware of the copious data generated during everyday activities or how marketers exploit the data. Bits of information left online amass into detailed profiles, revealing interests, credit standings, health conditions, and more.
Targeting Vulnerable Groups
Industry disclosure analysis led the FTC to propose several ‘hypothetical’ situations for targeted enforcement. Instances such as raising prices on baby products for new parents, increasing delivery costs for the home-bound, or raising ride share costs for emergencies exemplify marketing strategies the FTC hopes to oversee.
Action and Legislation
Although the FTC lacks authority to ban these practices directly, it can act against firms failing to disclose pricing methodologies, issuing cease-and-desist orders, litigating in federal court, and demanding consumer refunds.
State Efforts Against Surveillance Pricing
As the FTC proposal navigates public feedback, states also address these issues. Maryland prohibits large supermarkets and delivery services from setting individual prices using personal data starting October 1. New Jersey’s law advances further, banning digital shelf labels that may leverage phone data to tailor prices.
In California, a similar bill proposed by Assemblymember Christopher M. Ward is under legislative evaluation. Despite past attempts facing resistance from lobbying groups, the current bill emphasizes affordability and constituent welfare.
Industry advocates dismiss Orwellian concerns over surveillance pricing as exaggerated, claiming data usage chiefly serves creating personalized advertising or discounts rather than increasing profits.