Report from the Washington Post
In Brief – The Federal Trade Commission has proposed exposing companies to federal charges if they secretly use personal data to vary prices based on what individual consumers are believed to be willing to pay. FTC Chairman Andrew Ferguson said shoppers often expect listed prices to be the same for everyone, especially with markets and industries that have not used variable pricing in the past. In those cases, the FTC policy statement proposes that companies will need to clearly disclose the practice and the types of data used, and a company failing to do so could violate Section 5 of the FTC Act which prohibits unfair or deceptive practices. The agency will accept public comments for 30 days. Retail groups disputed claims that personal data is used to raise prices, arguing that competition encourages discounts and consumer value, and that restrictions on using personal data could threaten loyalty and rewards programs.
Context – Progressive tech industry detractors have long criticized online pricing practices that have been a feature of ecommerce for decades. Every day, on almost every website, people sometimes get lower price offers, and sometimes higher ones. Shockingly, consumers only like the idea of lower price offers. Businesses, on the other hand, benefit from the efficiency gains from tweaking prices up and down based on any number of factors to maximize revenue and clear inventory. Think of airline tickets. Senate Democrats are. The recent flood of state legislation is powered by claims that AI will supercharge the practice, especially by bringing personalized prices into physical stores. That’s a hypothetical scenario that is AI science fiction. There are no reports of any stores using surveillance, data and AI to apply in-store personalized pricing and there are many real-world barriers. Nevertheless, banning the practice has become a blue state and city policy ticking affordability, AI fears, and general corporate distrust. Meanwhile, the FTC response looks a lot like a Republican effort to tick the same boxes but without prohibiting existing variable pricing practices common across ecommerce and digitally-enabled businesses.