U.S. House committee backs FTC's probe into AI surveillance pricing

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(The Center Square) – A powerful U.S. House committee is advancing an ongoing investigation into surveillance pricing, where companies will use consumer data to secretly charge some customers higher prices than others for the same product or service.

Major corporations – including Amazon, Walmart, Lyft and Target – currently buy or directly harvest consumer behavioral data. Using artificial intelligence tools, they create profiles on individuals, then artificially inflate prices based on a customer’s “willingness to pay.”

Consumer “profiles” can include purchase history, real-time location, demographics, annual income, relationship status, IP address, internet browsing history and even cursor movements.

Dozens of industries have taken advantage of those profiles, implementing surveillance pricing for groceries, rental housing, airline fares, hotel rooms, retail goods, electronics, transportation, delivery services, event tickets and more.

House Committee on Oversight and Government Reform Chairman James Comer, R-Ky., reached out Wednesday to the Federal Trade Commission to request a staff-level briefing on the agency’s recently proposed rule to curb these deceptive pricing practices.

“The Committee’s examination of these practices has reinforced our concern that consumers are frequently unable to determine whether or how their personal data is being used to determine the price they are charged in store or online,” Comer wrote, adding that “the Committee supports a final policy that reflects a clear, workable, and well-supported legal framework.”

Although the FTC cannot ban all surveillance pricing – also known as “personalized pricing” – it does have the authority to crack down on “deceptive or unfair personalized pricing practices.”

The agency’s proposed rule states that businesses that use personalized pricing “should clearly and conspicuously disclose not just that the price is personalized, but also the basis for that personalization and the types of data on which the personalization is based.”

When companies fail to do so, they likely violate Section 5 of the FTC Act, because “consumers who are unaware of personalized pricing cannot take steps to avoid the higher prices that may result from it,” according to the FTC. “Tricked into forgoing alternative courses of action, misled consumers might suffer the injury of paying a higher price that they could have otherwise avoided.”

Surveillance pricing advocates also argue that scraping private personal data helps them cater loyalty programs to shoppers’ preferences. But those same loyalty programs promising to save customers money can become deceptive and even predatory, as some corporations will offer “discounts” on false higher prices.

Additionally, major corporations make up to hundreds of millions of dollars yearly selling the data they collect from individuals in their loyalty programs to other corporations.

In 2024 alone, Kroger made $500 million selling the personal data of its loyalty program members to other companies, a Consumer Reports investigation found.