WASHINGTON – Today, in the thick of the holiday shopping season, U.S. Sen. Mark R. Warner (D-VA) led Sens. Ruben Gallego (D-AZ), Richard Blumental (D-CT), and Josh Hawley (R-MO) in pushing the Trump administration to crack down on surveillance pricing, which eliminates a fixed or static price in favor of prices that are specially tailored to an individual consumer’s willingness to pay. As part of this letter, the senators highlight a 2024 Federal Trade Commission (FTC) study that found companies used “a wide range of personal data to set individualized consumer prices.” That study was shut down by FTC chair Andrew Ferguson, who cancelled the public comment period, effectively ending the study in January.

“As the FTC has documented, businesses are increasingly using personal data, such as demographic information, precise location, or even web browsing history, to target individual consumers with different prices for the same goods and services. Surveillance pricing builds upon not only the data that a company holds on a prospective customer, but also data purchased from shady data brokers,” wrote the senators. “Recent concerns about surveillance pricing for airline tickets illustrate the dangers of this highly intrusive – and for consumers financially burdensome – practice. Fetcherr, an A.I. analytics company, suggested it was developing pricing algorithms for airlines that would target individuals with specific prices that consider “factors like customer lifetime value, past purchase behaviors, and the real-time context of each booking inquiry” to drive up revenue.”

As part of this letter, the senators highlighted the Biden-era FTC study, which examined how companies tracked consumer behaviors – including a person’s precise location, browser history, and even mouse movements on a webpage – to inform their surveillance pricing tactics.

“The Commission had already begun a comprehensive market investigation into surveillance pricing under its Section 6(b) authority and issued a preliminary staff report on its findings. The 6(b) study explored the use cases and industries in which surveillance pricing is occurring and has helped reveal some of the details of this opaque business,” the senators continued. “The FTC found within its requests at least 250 businesses including grocery stores, apparel retailers, health and beauty retailers, home goods and furnishing stores, convenience stores, and hardware stores had adopted surveillance pricing strategies. Consumers deserve a fair playing field, where they’re not at the mercy of amorphous data brokers capturing their data and using it to determine their maximum financial pain point for a good or service. We urge the Commission to publish its Section 6(b) study on surveillance pricing and then take rulemaking and enforcement actions to reign in this exploitative practice.”

This effort follows strong leadership from Sens. Warner, Gallego and Blumenthal, who earlier this year demanded answers from Delta Air Lines CEO Ed Bastian after the company announced its plans to ramp up use of Artificial Intelligence to set surveillance-based ticket prices.

The full text of the letter is available here and below:

The Honorable Andrew N. Ferguson

Chairman

Federal Trade Commission

600 Pennsylvania Avenue, NW

Washington, DC 20580

Dear Chairman Ferguson:

We write to express our concern with the practice of “surveillance pricing” and to urge the Federal Trade Commission (“FTC” or “Commission”) to crack down on the increasingly common practice of companies using personal information to raise prices for consumers. We call on the Commission to re-open its market investigation into surveillance pricing and to take appropriate steps to protect consumers, including enforcement actions and rulemakings. 

As the FTC has documented, businesses are increasingly using personal data, such as demographic information, precise location, or even web browsing history, to target individual consumers with different prices for the same goods and services. Surveillance pricing builds upon not only the data that a company holds on a prospective customer, but also data purchased from shady data brokers. The practice of surveillance pricing has also given rise to new tech companies that claim to use “advanced algorithms, artificial intelligence and other technologies with personal information about consumers ... to categorize individuals and set a targeted price for a product or service” – sophisticated specialists in raising costs on consumers.

Recent concerns about surveillance pricing for airline tickets illustrate the dangers of this highly intrusive — and for consumers financially burdensome — practice. Fetcherr, an A.I. analytics company, suggested it was developing pricing algorithms for airlines that would target individuals with specific prices that consider “factors like customer lifetime value, past purchase behaviors, and the real-time context of each booking inquiry” to drive up revenue. Taken together, airlines could find each consumers pain point and extract the most revenue, taking advantage of urgent trips. These concerns build on existing anxieties about airlines using dynamic pricing. Moreover Fetcherr’s ambitions to “[expand] into new verticals like hotels, cargo logistics, and even finance” illustrates the growth of this practice.

The Commission had already begun a comprehensive market investigation into surveillance pricing under its Section 6(b) authority and issued a preliminary staff report on its findings. The 6(b) study explored the use cases and industries in which surveillance pricing is occurring and has helped reveal some of the details of this opaque business. The FTC found within its requests at least 250 businesses including grocery stores, apparel retailers, health and beauty retailers, home goods and furnishing stores, convenience stores, and hardware stores had adopted surveillance pricing strategies. Consumers deserve a fair playing field, where they’re not at the mercy of amorphous data brokers capturing their data and using it to determine their maximum financial pain point for a good or service.

We urge the Commission to publish its Section 6(b) study on surveillance pricing and then take rulemaking and enforcement actions to reign in this exploitative practice

Sincerely,