Mastercard and Others Investigated for ‘Surveillance Pricing’
Jul 31, 2024
Mastercard and seven other companies are under investigation by the US Federal Trade Commission (FTC) for ‘surveillance pricing’ amid concerns that it might introduce discrimination or privacy risks.
Payments Dive reports the key issue is uncovering how technology is being employed to govern pricing strategies, and the implications of this for privacy, competition and consumer protection.
The federal agency is focused on how third-party firms are using consumer demographics and observed behaviours in tailoring pricing to shoppers, especially those using digital tools to purchase. The agency wants to better understand those methods in the interest of making sure consumers don’t face discrimination in pricing, or have their privacy put at risk.
An FTC official explained that while consumer perceptions of targeted advertising vary—with some finding it invasive, others feeling it benefits them and some not caring either way—its use becomes more concerning when the information is used to dynamically change pricing. In such cases, personal data including an individual’s location, demographics and credit, browsing or shopping history could all be used to set prices for a product or service unique to them. This opens the door to a wide range of discriminatory price changes based on information routinelycollected and monetised by businesses.
The agency wants to ensure that the pricing based on such surveillance is not causing harm to certain groups, such as women or those in rural communities.
The companies served civil investigative demands by the FTC are Mastercard, JPMorgan Chase—the largest bank in the US—software firm Revionics, e-commerce service provider Bloomreach, Task Software, pricing optimisation company PROS and the consulting firms Accenture and McKinsey.
Payments Dive notes the FTC’s action has been prompted by the growth of e-commerce seen since the COVID-19 pandemic and the arrival of ‘digitised pricing’ as well as growing concerns around ‘an imbalance in the use of [personal] data among companies.’
While it is crucial to investigate and regulate the behaviour of digital payment providers and their surrounding technology, it is equally important to support access to and acceptance of cash, which stands as competition to for-profit payment options while also offering an inclusive and private way for anyone to transact.