What is the FTC Doing About Surveillance Pricing

Have you ever searched for a product online, found it at your local store, and made an in-person purchase? Did you notice that the online and in-store prices weren't the same? That's an example of surveillance pricing, and it's a common retail tactic.

In 2019 a study was conducted to uncover how leading retailers like Target set pricing on the fly. Using the customer's geolocation data in their Target app, product prices increased the closer the researcher got to a physical store. Target wasn't the only retailer found to use this same pricing disparity.

Staples found that customers who were farther away from a physical store would pay more for a stapler online than a customer closer to the same store. When customers were within 20 miles of a competitor's store, the Staples app offered a lower price.

How the FTC Is Stepping Up

Is surveillance pricing illegal? No. (At least not yet.)

Is it distinctly deceptive, manipulative, and consumer unfriendly? Yes.

The FTC thinks so too and for reasons beyond just the obvious on-the-fly price flips.

Price changes aren't new or always intended to harm us. Sellers have long used dynamic pricing techniques that are influenced by economic supply and demand factors. But in this case, everyone pays the same price without regard to personalized data.

With surveillance pricing, more subtle data influences are at play. It's hardly a surprise to any of us that our data is continually harvested and mined by companies for their benefit. Our habits, movements, and behavior patterns are readily available through every online and offline action we take. We're a walking goldmine of consumer insights and privacy giveaways.

Unseen by us, companies diligently track, store, and use our browsing history, page clicks, scrolls, time on a site, abandoned carts, credit history, health history, the list goes on.

Each of these data points contributes to a comprehensive consumer profile that companies use to decide how much we're willing to pay for one of their products or services. While the price each of us pays is reason enough for giving this practice greater scrutiny, more harmful practices such as discrimination and hidden biases need to be uncovered and addressed.

That brings us back to the FTC. In January 2025, they broaden their research into companies' surveillance pricing practices. One of the reasons for this increased interest was concern over our data protection, privacy, and parity.

Regulators and Congress have historically lagged far behind in technology oversight and legislation. Look no farther than Google. Years ago, there were early warnings about the potentially harmful, intrusive scope of Google's reach into online users' data collection. These concerns were mostly dismissed.

Now, here we are in mid-2025, and Congress is calling for the breakup of Google's long-standing ad monopoly. There's no unringing the bell. The harm has been done. Google's massive data stockpile won't be destroyed or returned to all of us unsuspecting users.

Additional Unseen Risks of Surveillance Pricing

1. Bias and discrimination. Surveillance pricing enables unfair pricing for people of color, ethnicity, and economic status. Historically, customers have been subjected to higher prices because of their lower income status or color. This disparity harms those least likely to afford the products and services they often need.

2. Competitive disruption. Small businesses are at a competitive disadvantage. They lack the financial and technical resources to collect, compile, and employ the rich consumer profiles that large companies have at their disposal to manipulate pricing. Large competitors can easily drive customers to their app or physical location with lower pricing when a smaller competitor is nearby.

3. Selective product offerings. Product steering is a frequently-used practice to drive customers to specific products based on their buying profile. This can lead to favoring higher priced products as well as eliminating some competitive products.

4. On-the-fly decisions. The fast growth of AI tools is only increasing our loss of data protection. LLMs are hungry for every available piece of new training data. In exchange for this continuous learning and increased processing speed, our consumer behavior becomes nearly real-time decision-making for product and service providers.

Fortunately, in July 2024 the FTC ordered eight companies that offer surveillance pricing products and services to disclose how they are gathering and using private data. The companies were Mastercard, Revionics, Bloomreach, JPMorgan Chase, Task Software, Accenture, and McKinsey & Co. No further updates have been released by the FTC yet so we'll continue to follow as this unfolds.

Competition for our attention and buying decisions will become more laser-focused, and it's safe to say that we, the consumers, will become the losers.

What Can We Do to Protect What Little Data Privacy We Have Left