Saturday, February 8, 2025

Surveillance Pricing Is Ripping You Off

It’s 5 a.m. and your toddler is crying. His forehead is hot. You remember, cursing yourself, that you are out of Tylenol. You squint at your phone and order more, selecting the quickest delivery option. Actually, that’s not soon enough. You pay the $2 fee so that it will arrive faster. Wait, where is the thermometer? Fine, order that too. You barely manage to complete the purchase before your kid throws up.

What if the retailer that sold you both of these items had raised their prices slightly, just for you, based on your previous shopping habits? Because it had access to data that pigeonholed you as a stressed-out parent who won’t notice that you’re being upcharged for medical supplies, especially at 5 a.m.? Because it could? This is known as surveillance pricing, and a recent study from the Federal Trade Commission suggests that it happens all the time.

To back up for a moment: Last July, the FTC asked eight large companies — including Mastercard, JPMorgan Chase, and Accenture — to turn over information about the data they collect on individual consumers and how it affects pricing. Investigators were particularly interested in middlemen hired by retailers to use algorithms to change and target prices for different markets — in other words, how they harness your personal information to determine whether (and when) they can charge you more. You know how Uber adjusts pricing based on location and demand? The FTC had reason to believe that companies were doing that with services and products they sold but microtargeted to customers based on their unique profiles — their age, their spending patterns, and even their tendency to order a specific thing at a certain time of night.

Late on January 17, in the final hours of the Biden administration, the FTC published the initial findings of its study, which was swiftly buried under an avalanche of Trump-related news. The report “revealed that details like a person’s precise location or browser history can be frequently used to target individual consumers with different prices for the same goods and services.” Then–FTC chair Lina Khan recommended that the FTC “continue to investigate surveillance pricing practices because Americans deserve to know how their private data is being used to set the prices they pay.”

Andrew N. Ferguson, Trump’s pick to replace Khan, dissented from the report, implying that the investigation will not continue. In the absence of concrete policy to oversee or regulate surveillance pricing, it can expand unchecked. That leaves normal consumers out here to fend for ourselves.

Corporate greed is not new, nor is it illegal. Retailers are always trying to charge the highest amount they can get away with — it’s the principle of supply and demand, and how they stay afloat. What is new, though, is the technology that retailers can use to predict what specific customers might be willing to pay and the opportunities to offer tailored pricing to individuals. (If you’re shopping online, how do you know if your price is different from another person’s? You don’t.) This is different from old-fashioned dynamic pricing — where prices go up or down for everyone depending on market demand — and much creepier.

If your bills continue to be all over the place, and you suspect that you’re getting ripped off simply because of your past shopping behavior, well — you’re not crazy. Here, policy experts share their advice on how to spot surveillance pricing and fight it when it happens.

by Charlotte Cowles, The Cut |  Read more:
Image: Photo-Illustration: by The Cut; Photos: Getty Images