Consumer behaviours ranging from mouse movements on a web page to the type of products that consumers leave unpurchased in an online shopping cart can be tracked and used by retailers to tailor consumer pricing, according to the US Federal Trade Commission’s initial findings from its ongoing surveillance pricing market study.
DOCUMENTING: In a bid to better understand the shadowy market that third-party intermediaries use to set individualised prices for products and services based on consumers’ characteristics and behaviours, like location, demographics, browsing patterns and shopping history, the FTC examined documents received from several companies in July.
- The study is focused on intermediary firms, which are the middlemen hired by retailers that can algorithmically tweak and target their prices.
- The intermediaries concerned worked with at least 250 clients that sell goods or services ranging from grocery stores to apparel retailers.
- The Federal Trade Commission works to promote competition, and protect and educate consumers.
THE ANALYSIS: An initial analysis of documents provided by Mastercard, Accenture, PROS, Bloomreach, Revionics and McKinsey & Co show that retailers frequently use people’s personal information to set targeted, tailored prices for goods and services—from a person's location and demographics, down to their mouse movements on a web page.
- Instead of a price or promotion being a static feature of a product, the same product could have a different price or promotion based on a variety of inputs—including consumer-related data and their behaviours and preferences, the location, time, and channels by which a consumer buys the product, according to the perspective.
- Some respondents can determine individualised and different pricing and discounts based on granular consumer data, like a cosmetics company targeting promotions to specific skin types and skin tones.
- The perspective also found that the intermediaries the FTC examined can show higher priced products based on consumers’ search and purchase activity. As one hypothetical outlined, a consumer who is profiled as a new parent may intentionally be shown higher priced baby thermometers on the first page of their search results.
- The FTC found that widespread adoption of this practice may fundamentally upend how consumers buy products and how companies compete.
WHAT THEY SAID:
The FTC should continue to investigate surveillance pricing practices because Americans deserve to know how their private data is being used to set the prices they pay and whether firms are charging different people different prices for the same good or service.
— Lina M Khan
Chair
Federal Trade Commission
