FTC Demands Information From Walmart, DoorDash, and Others in Personalized Pricing Probe

The Federal Trade Commission (FTC) is demanding information from some of the nation’s largest airlines, retailers, and gig-economy companies about whether and how they use consumer data to set personalized pricing.The regulator said on Oct. 28 that it sent compulsory information requests to nine companies: Walmart, Target, Uber, Lyft, DoorDash, Instacart, Delta Air Lines, United Airlines, and JetBlue Airways.The inquiry will examine whether prices for airline tickets, rides, food deliveries, and other goods or services vary from one person to another based on information such as loyalty-program participation, browsing habits, or other personal data.The FTC is also asking ride-hailing and delivery companies whether similar information is used to determine which jobs workers are offered and how much they are paid.“We intend to scrutinize the opaque methodology that some companies in these industries may be using to determine how much consumers pay or how much gig workers are paid for the same product or service,” FTC Chairman Andrew Ferguson said.“Consumers deserve to know whether companies use their web surfing habits or other personal data to estimate the highest price they can charge each consumer.”Wide-Ranging Information RequestsThe orders require the companies to provide detailed information about pricing and compensation practices dating back to Jan. 1, 2023.Among other things, the FTC wants companies to identify any software or artificial intelligence tools that use personal information to set prices or worker pay.Companies must also explain what data go into those systems, how the information affects prices, and when employees can override the results.The FTC is also seeking internal research and experiments involving pricing, job assignments, and compensation, including so-called A/B tests that compare different approaches.Companies have 45 days after receiving the orders to respond. The orders do not by themselves accuse any of the companies of any wrongdoing.Growing Scrutiny of Personalized PricingAdvances in data collection and algorithmic pricing have raised concerns that companies could tailor prices to individual consumers.Personalized pricing generally involves analyzing information about a particular consumer to estimate what he or she may be willing to pay.An FTC study launched in 2024 found that potentially relevant information could include a person’s location, income, browsing history, shopping habits, and even items left in an online shopping cart.That is different from traditional dynamic pricing, in which prices change for everyone based on supply and demand or time of day.The FTC study focused on companies providing pricing technology rather than the retailers actually deciding what consumers pay. The Oct. 28 inquiry seeks information directly from businesses that sell goods and services.In August, the FTC proposed a policy that would require businesses to “clearly and conspicuously disclose” whether they are engaging in personalized pricing and share the types of data they’re using to set those prices.The agency acknowledged that it lacks authority to ban personalized pricing in all circumstances. But it said failing to disclose the practice could potentially violate the FTC Act’s prohibition on unfair or deceptive conduct.The companies did not respond to requests for comment by publication time.“There is no fare product Delta has ever used, is testing or plans to use that targets customers with individualized offers based on personal data,” a Delta spokesperson said in a statement.JetBlue similarly said its fares are determined by factors such as demand and available seats rather than customers’ personal information.Instacart said it does not use consumers’ personal data to set grocery prices. It also said shopper compensation is based on work-related factors, including the number of items in an order, expected shopping time, and travel distance.“We appreciate the FTC’s focus on this practice,” an Instacart spokesperson said. “We are committed to transparency and improving affordability for customers.”Walmart CEO John Furner said in a statement in September that the retailer does not use personal information such as income, shopping history, or a customer’s urgency to buy to set prices, and that it won’t be doing so in the future.Target also said in a statement on its website that it does not use personal information to raise prices for customers “based on who they are, where they live or when they shop.”