When does personalization become ‘surveillance’? Chase and Mastercard are swept up in FTC probe
AI and other digital technologies enable merchants to tailor prices to individuals based on past actions and purchases. Proponents call it "personalization," but critics call it "surveillance pricing." Banks have a role in this controversy as the Federal Trade Commission digs in.
It’s become a cliché that “data is the new oil.” Now the Federal Trade Commission wants to find out if huge troves of consumer data married to artificial intelligence and related technology is making the wheels of commerce slippery.
Sophisticated technology has spurred the development of “surveillance pricing,” in which different people are charged different prices for the same goods and services, based on their tracked, observed behavior. (One source credits the New York State attorney general’s office with coining the term.)
As portrayed by FTC in a blog post and other materials, the older practice of “targeted pricing” was based on such factors as a consumer’s address, shopping history or demographic makeup. (In banking, some such moves can trigger fair-lending violations.) Now, advanced technology and the ability to track more than ever has opened the door to “price changes based on information like your precise location, your shopping habits, or your web browsing history,” according to the blog.
“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,” said FTC Chair Lina Khan in a statement. “Americans deserve to know whether businesses are using detailed consumer data to deploy surveillance pricing.”
continue reading »