U.S. Privacy and Data Protection | Insights | August 2024 (Federal Law)

If your business is grappling with advertising or data privacy law issues, understanding the latest developments from the Federal Trade Commission (FTC) could be crucial. This is especially important for companies processing large amounts of sensitive data, or using new data tools.

Surveillance Pricing

Recently, the FTC issued orders to multiple companies involved in surveillance pricing,¹ which generally uses consumer data to set personalized prices for the same goods or services. This move is part of a broader investigation into how these practices impact privacy, competition, and consumer protection. In particular, the FTC’s inquiry aims to uncover the effects of using detailed personal data—such as location, demographics, browsing history, characteristics, behavior, and finances—to determine prices by using algorithms and artificial intelligence (AI).

In a strong statement, the FTC Chair Lina M. Khan commented: “Firms that harvest Americans’ personal data can put people’s privacy at risk. Now firms could be exploiting this vast trove of personal information to charge people higher prices . . . Americans deserve to know whether businesses are using detailed consumer data to deploy surveillance pricing, and the FTC’s inquiry will shed light on this shadowy ecosystem of pricing middlemen.”²

The FTC's investigation targeted firms like Mastercard, JPMorgan Chase, and McKinsey & Co., seeking detailed information on their surveillance pricing technologies, including the types of products offered, the data collection methods used, and how practices might affect consumers. According to the FTC, which proclaimed to use its section 6(b) authority to conduct wide-ranging studies, this study is intended to provide a clearer picture of how these companies use AI and other technologies to implement targeted pricing strategies based on personal data.

The focus on surveillance pricing highlights the related need for compliance in data-driven advertising practices. Engaging with an attorney who specializes in advertising law can help ensure your business practices align with current regulations, and risk tolerance, as well as provide protection from potential legal pitfalls as the regulatory landscape continues to evolve.

Kronenberger Rosenfeld, LLP regularly assists businesses with digital advertising and data privacy issues, including proactive compliance and experienced advice if legal issues arise. If you need assistance for your business, you can contact our firm with our online case submission form here.