The FTC wants major companies to explain whether personal information influences what Americans pay for purchases and earn from gigs.
What Happened? |
The Federal Trade Commission has ordered several major retailers, airlines, and gig platforms to explain how they use personal information to determine customer prices and worker compensation. The orders went to Walmart, Target, Delta, United, JetBlue, Uber, Lyft, DoorDash, and Instacart. |
The agency wants to determine whether customers pay different prices based on loyalty memberships or personal data, and whether drivers’ compensation reflects phone usage or a history of accepting assignments. |
FTC Chairman Andrew Ferguson said the inquiry would scrutinize methods that determine what people pay or earn for the same service. The commission can seek enforcement in federal court if companies withhold information. Several businesses rejected the suggestion that they personalize prices. Delta and JetBlue denied setting individual fares using personal data, with Walmart and Target issuing similar assurances about retail pricing. |
Separately, the FTC is considering a disclosure policy for personalized pricing. Public comments remain open until November 21. The inquiry does not itself establish wrongdoing. |
Why It Matters |
Price comparison assumes competing offers tell shoppers something useful about the market, but personalized pricing complicates that. If a company estimates what each customer will tolerate, two people buying the same thing could face different offers for reasons neither can readily identify… |
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That is different from a fare rising as seats sell out or a delivery becoming more expensive during peak demand. While these changes reflect conditions surrounding the transaction, pricing based on a customer’s profile introduces judgments about a specific buyer. This gives companies an informational advantage that makes shopping around a less viable option. |
That’s not to say personalization always hurts consumers, as targeted discounts can attract customers who might never have made a specific purchase otherwise. The issue is just how frequently this technology is actually producing bargains rather than higher prices or other distinctions that customers would consider unfair. |
Worker compensation raises a different, but serious issue. The investigation is probing whether a platform could use someone’s acceptance history to estimate the lowest payment likely to secure a driver. Therefore, establishing what companies actually do is essential. Disclosure would make practices more visible, but visibility alone would not settle which uses deserve limits or what those limits should be. |
How It Affects You |
The unsettling possibility for U.S. consumers is that loyalty could be a liability. A retailer that knows you rarely switch stores may have less reason to offer you a discount, just as a driver who routinely accepts low fares may worry that doing so affects the next offer. Neither practice has been established by this inquiry. But both explain why assurances about fair treatment need evidence. |
The FTC’s demands will ideally provide customers and workers with a clearer picture of what their information buys them and, more specifically, what it costs. While individuals routinely trade privacy for convenience, paying more at checkout or earning less behind the wheel would be a considerably worse bargain than many thought they had made. |
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