FTC orders Target, Walmart to answer personalized pricing inquiry

By Tom Whitfield

What did the FTC order?

The FTC ordered Walmart and Target to respond within 45 days to a 15-page inquiry into whether personal data and artificial intelligence help companies set different prices for the same product or service.

The orders also went to several airline companies, ride-sharing firms and food-delivery entities. The FTC wants details on whether “pricing for a ticket, ride share, food delivery or other product or service varies from one person to the next” based on analysis of personal data from artificial intelligence and other sources.

The 15-page order also requests details about how companies adjust or set compensation using personal information. It asks whether prices can differ because of loyalty programs.

In a Wednesday press release, FTC Chairman Andrew Ferguson said: “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.”

Ferguson added: “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. Workers also deserve to know if their compensation is affected by how companies use their personal data.”

The inquiry covers both what consumers pay and what gig workers earn.

Can the FTC compel compliance?

Order recipients have 45 days from receipt to respond. The FTC can seek compliance in federal court if a recipient fails to provide the requested information, according to the agency’s Wednesday announcement.

That court option gives the agency leverage beyond the voluntary disclosure process.

How are the retailers responding?

Walmart did not immediately respond to Retail Dive’s request for comment on the order to file a special report. Over the past month, the mass retailer has publicly defended itself against allegations of personalized pricing and concerns about the role of digital shelf price tags.

Target directed Retail Dive to a fact sheet published earlier this month. The retailer states: “Target does not use personal information to raise prices for guests based on who they are, where they live or when they shop.”

The same fact sheet says Target prices can vary because of local costs, pricing regulations and competition. Those factors reflect market and regulatory conditions rather than an individual customer’s identity, according to Target.

Target also says its Target Circle loyalty program “can use your shopping history to help surface deals and offers that are more relevant to you and that help you save — not to raise your price.”

For now, Target has supplied a written denial, while Walmart has not commented on the special report.

Why is the FTC acting now?

The FTC began seeking public comment on personalized pricing in August. Earlier this week, the agency joined 20 U.S. states in suing Dollar General for allegedly engaging in deceptive pricing practices.

The 45-day responses will give the FTC evidence to assess whether data-driven pricing and compensation practices require further action.