FTC orders Delta, Walmart, and others to explain how personal data is used to set prices

The U.S. Federal Trade Commission is ordering Delta Air Lines, Walmart, Target, and other companies to provide the agency with information on how they use consumer data to set prices.

The agency sent orders to nine airlines on Wednesday, asking them to provide details about the factors that determine how prices vary from one person to the next.

The FTC also ordered ride-sharing companies like Uber and delivery companies like DoorDash to share how they use their independent drivers' personal data when setting their compensation rates.

"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 N. Ferguson said in a statement. "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 agency mentioned factors including participation in loyalty programs and analysis of personal data by algorithms. If the companies fail to turn over data, the FTC said it could compel compliance in federal court.

The move comes a few months after the FTC announced a proposed policy requiring businesses to "clearly and conspicuously disclose" if they engage in personalized pricing and share the types of data they use to set those prices. The agency has extended the comment period on the policy to Nov. 21.

Nonprofits like the Center for Democracy praised the FTC's announcement, calling surveillance pricing "a textbook example of the kind of unfair practice" the agency should be examining.

"Consumers should be treated fairly, and when companies use data to determine how much they can extract from someone based on what they can afford or how urgently they need it, they're exploiting them rather than offering a fair price. It is yet another way large companies exercise power over consumers, who are usually left in the dark about this practice and have virtually no ability to challenge it," CDT's senior policy analyst Sydney Saubestre told CBS News in a statement. "When affordability is already a major concern, we shouldn't allow companies to turn people's vulnerabilities or data into opportunities for profit. We need meaningful limits on how personal data can be used to set prices, especially when people are already struggling to afford the basics."

Companies respond to FTC price inquiry

In response to the federal agency's move, Delta said that it has "zero tolerance for discriminatory or predatory pricing" and fully complies with pricing and advertising laws.

"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," the company said in a statement.

Instacart said compensation for its shoppers is based solely on job-related criteria, including the distance traveled, the number of items, and expected shopping time. The grocery delivery company said it also doesn't use consumers' personal information to set prices. Prices on Instacart's website are set by the retailers the company serves.

"We appreciate the FTC's focus on this practice. We are committed to transparency and improving affordability for customers," a spokesperson for Instacart said Wednesday. "We will continue engaging with policymakers and regulators to ensure they understand how pricing on our platform works."

In research released earlier in October by Groundwork Collaborative, the group said Walmart had applied for patents that would allow the retailer to compile profiles on shoppers and then use them to set prices via digital price tags or through its app.

Walmart has denied developing any tools that would use personal information to set prices and said it does not plan to do so in the future.

"We don't set different prices based on who you are or the time of day, and we won't. Your income, shopping history, urgency, or what we think you could pay won't change the price. And whether you're buying groceries or electronics on a hot afternoon or in a sudden rush for an item, it's never a reason to charge you more," Walmart President and CEO John Furner said in a letter. "We'll hold our shopping tools to the same promise."