Legislation Aimed at Ending Personalized Pricing Based on Consumer Data
In a move to curb the practice of businesses charging different prices to consumers based on personal data, Senator Ruben Gallego has proposed the One Fair Price Act. This legislation targets the controversial method known as surveillance pricing, where businesses use personal information to determine individualized prices.
“They’re collecting so much information that it’s not really capitalism anymore,” Gallego stated. “It’s truly exploitative at this point.”
Research from the final days of the Biden administration, as indicated by preliminary findings from the Federal Trade Commission (FTC), suggests that retailers employ a broad array of data points, from location to online behavior, to set targeted prices.
Despite this, Andrew Ferguson, the FTC Chair under President Donald Trump, opposed the release of the initial report on surveillance pricing and ceased a public comment request on the matter. A spokesperson informed the New York Times that the study remains underway.
Under the proposed law, it would be illegal for companies to leverage surveillance data to offer varying prices for identical products. This would empower the FTC, state attorneys general, and consumers to take legal action. Exceptions would be made for insurance and credit companies.
Discounts to specific groups, such as veterans or teachers, and loyalty programs would still be permissible, provided they do not result in preferential treatment among consumers.
Lindsay Owens, the executive director of the Groundwork Collaborative, highlighted the necessity of such legislation to counteract the rising use of technology in setting prices. She cited Delta Air Lines’ use of artificial intelligence for personalizing ticket prices, as well as Starbucks’ alleged use of surveillance pricing through its rewards app, as reported by the Washington Post.
Owens described this trend as a “new frontier” for pricing technology and infrastructure, which is being utilized by large retailers.
Coinciding with Gallego’s announcement, a study by the Groundwork Collaborative and Consumer Reports revealed that the grocery delivery app Instacart charges different product prices to different customers. While no evidence showed demographic targeting by Instacart, Owens noted that some companies providing products on Instacart utilize behavioral data for pricing strategies.
The fate of Gallego’s bill is uncertain, as it must pass through a Republican-led Congress and receive approval from President Trump. However, Gallego remains optimistic, stating, “Everything takes time. It doesn’t matter when you introduce it and who (introduces it), whether you’re a Democrat or Republican, so I’m willing to work it. But I think that this can have a lot of support across the board.”
Meanwhile, President Trump has recently ordered an investigation into potential price-fixing and anti-competitive practices within the food supply chain, though the White House has not commented on Gallego’s proposed legislation.
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