Should "surveillance pricing" be banned?

Summary

The Indicator from Planet Money

Episode Title: Should "surveillance pricing" be banned?
Date: September 23, 2025
Hosts: Adrian Ma, Darren Woods

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Episode Overview

This episode dives into the rise of "surveillance pricing," also known as personalized pricing. The hosts discuss how companies, particularly in the digital world, use consumer data to set individualized prices — a topic thrust into the spotlight following news about Delta Air Lines’ AI-powered pricing. The conversation explores the ethical, economic, and technical implications of this practice: is it as sinister as it sounds, and should it be banned or regulated?

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Key Discussion Points and Insights

What Is Surveillance Pricing?

• Definition: Surveillance pricing, or personalized pricing, is when companies use personal data (like your location, demographics, or browsing history) to set individualized prices tailored to your perceived willingness to pay ([03:07]).
  • Sam Levine (former FTC director): “The goal is to charge each person most that they're willing to pay.” ([03:07])
• Data Collection: Companies gather data via web browsers, cookies, apps, or data brokers, and use this for targeted ads and, potentially, for pricing ([03:21]).

Legality and Scope

• Current legal status: Not illegal, though it’s contentious.
  • Darren Woods: “…this is not illegal, but... it’s the kind of consumer harm Sam was looking for when the FTC started investigating this type of pricing last year.” ([04:11])
• Prevalence:
  • The FTC's investigation found over 250 companies across sectors (grocery, hardware, apparel) engaging in, or being advised about, surveillance pricing ([04:42]).

Documented Examples

• Historical “smoking guns”:
  • 2012 Wall Street Journal: Staples and Office Depot showed different prices to customers based on location and browsing ([05:09]).
  • 2015 ProPublica: Princeton Review charged more for online tutoring to ZIP codes with larger Asian populations ([05:35]).
• Transparency Issue: Much of how companies use data is a "black box"—hard to track or prove ([05:52]).

Government and Regulatory Response

• FTC Investigation: Largely paused after agency leadership changes; no comment from the FTC despite requests ([05:52]).
  • Sam Levine comment: “The FTC's seeming inaction and lack of attention to this issue is quite worrying. And I think it's why states really need to step up.” ([06:20])
• State Actions:
  • New York requires disclosure when businesses use personalized algorithmic pricing ([06:30]).
  • Legislation proposed in Georgia, Colorado, California, and Ohio ([06:40]).

Economic and Ethical Debate

• Skeptics of Regulation:
  • Jean Pierre Dube (Marketing Professor, UChicago):
    • “The concept of a company using data that I wasn't aware they had to determine a marketing offer for me. I don't think that's all that new.” ([06:53])
    • “Calling things surveillance pricing is just a way of branding it in a very negative light..." ([07:08])
  • It's long been common for businesses to tailor prices based on perceived customer ability to pay (car dealer analogy) ([07:21]).
• Potential Benefits:
  • Differential pricing can enable lower prices for some; for instance, ZipRecruiter experiment where 60% of small businesses got a lower price than with a flat fee ([08:10]).
  • Jean Pierre Dube: “Most of these people being charged less were the smallest businesses. And so if you think small businesses deserve special advantages… this seems a lot more equitable and fair.” ([08:32])
• Consumer Agency:
  • Consent and transparency are key. The ZipRecruiter example involved voluntary data sharing, unlike the secretive practices that trouble critics ([08:44], [09:01]).
  • “[I] would definitely agree with you that it feels like consumers are losing the agency over their personal information.” ([09:01])

What Can Consumers Do?

• Mitigation strategies:
  • Regularly clear your web browser’s cache ([09:14])
  • Use private browsing or VPNs ([09:26])
  • Consider shopping in physical stores and paying in cash (jokingly presented as extreme) ([09:31])

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Notable Quotes & Memorable Moments

• Adrian Ma (on data-driven ads):
  “You Google for one pair of shoes, and then suddenly those pairs of shoes are kind of following you all around the Internet.” ([03:45])

• Sam Levine (on FTC inaction):
  “I really think the FTC's seeming inaction and lack of attention to this issue is quite worrying. And I think it's why states really need to step up.” ([06:20])

• Jean Pierre Dube (on negative branding):
  “Calling things surveillance pricing is just a way of branding it in a very negative light so that people would have a hard time wanting to defend it, because how could surveillance ever be good in a free country like America?” ([07:08])

• Adrian Ma (on mitigation tips):
  “Cash seems pretty easy.” ([09:24])
  “That's going too far.” ([09:35])

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Timestamps for Key Segments

• 00:12-01:16: Introduction to in-store vs. online pricing, and what surveillance pricing means
• 03:07: Sam Levine explains surveillance pricing and data collection methods
• 04:11-04:42: Legal landscape and scale of data-driven pricing
• 05:09-05:52: Historical examples and industry opacity
• 06:20-06:47: Regulatory action and legislative proposals
• 06:53-08:10: Economic arguments from Jean Pierre Dube; personalized pricing isn’t new
• 08:10-08:44: Case study—ZipRecruiter experiment
• 09:01: Consent and consumer agency concerns
• 09:14-09:35: Tips for consumers to avoid being targeted by surveillance pricing

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Conclusions

• Surveillance pricing uses personal data to tailor prices online.
• There’s a live debate on whether it's exploitative, beneficial, or simply a modern update to age-old business practices.
• Transparency and consumer agency are at the core of the controversy.
• Legislative momentum varies: while the FTC has slowed its inquiry, some states are moving ahead with disclosure or regulation.
• Consumers can take basic steps to reduce risk, but solutions remain imperfect.

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Tone: Engaging, lightly skeptical, and balanced—reflecting the hosts’ mix of curiosity and concern, as well as expert perspectives.

Transcript

[Announcer]

Npr.

[Adrian Ma]

When you walk into a store, you're probably used to seeing price tags on everything. A little sticker or a sign that says to every customer, here is what the product costs. But when you shop online, there is no price tag. There's just the price you see on screen.

[Darren Woods]

And because of that, do you ever wonder whether the price that you see is the same as what others are seeing? Like, could companies use your online data, like your location and browsing history, to charge you more than somebody else?

[Adrian Ma]

Sounds fishy, but the short answer is yes. It's a practice called personalized pricing, though to critics it has a more sinister name, surveillance pricing. This is the indicator for Planet Money. I'm Adrian Ma.

[Darren Woods]

And I'm Darren Woods. Surveillance pricing was in the news recently after Delta Air Lines said it's been using AI to set some ticket prices. And even though Delta says it does not engage in personalized or surveillance pricing, that hasn't stopped some lawmakers from wanting to ban the practice.

[Adrian Ma]

So today on the show, we wade into this debate. Is surveillance pricing as bad as it sounds? And what, if anything, should we do about it?

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[Sam Levine]

Meaning?

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[Darren Woods]

In economics, there is a concept called price discrimination. It kind of sounds bad, but, you know, economists use it in a more neutral way to describe a situation where different people are charged different prices for the same product. Like a movie theater might sell cheaper tickets to students or seniors, but when.

[Adrian Ma]

It comes to shopping online, you don't know if the price that you see is the same as what others see. And this creates the potential for what Some call personalized pricing, and others call surveillance pricing.

[Sam Levine]

So surveillance pricing is when companies collect data from consumers, like their location data, their demographics, their Internet search history to set individualized prices. And the goal is to charge each person most that they're willing to pay.

[Adrian Ma]

Sam Levine is a former director for the Federal Trade Commission's Bureau of Consumer Protection. And he says companies collect data on consumers in a few basic ways. They can track you through web browsers or cookies or through apps that you use. They can also buy that data from a third party data broker. And once they have it, they can use it to target you with, say, personalized ads.

[Darren Woods]

Yeah, you probably know the drill. You Google for one pair of shoes, and then suddenly those pairs of shoes are kind of following you all around the Internet.

[Adrian Ma]

So creepy.

[Sam Levine]

So the same technology that's powering advertising can power pricing as well. So instead of just showing you an ad for shoes, if a company knows that you're really looking for shoes and maybe you're in a hurry to get them, they can raise prices on those shoes because they know you're really looking for it.

[Darren Woods]

We should say this is not illegal, but. But in theory, it's the kind of consumer harm Sam was looking for when the FTC started investigating this type of pricing last year. As part of these efforts, the agency demanded data from eight companies that allegedly offer surveillance pricing products and services. End quote. The companies included names like MasterCard, JP Morgan Chase, and McKinsey.

[Adrian Ma]

I hear the theoretical argument behind it, but how, how big is the scope of this problem really?

[Sam Levine]

I think the scope is big and getting bigger. The FTC study we did and that we released some of the results from in January showed that just among the eight pricing consultants we looked at, they were working with more than 250 companies in industries ranging from grocery to hardware to apparel, and more.

[Darren Woods]

Sam says companies have the technology and the motive to engage in surveillance pricing, and he thinks it should be banned.

[Adrian Ma]

Here's the thing. It's really hard to say just how prevalent this practice is. Through a website called Consumer Watchdog, we did find a few documented examples that suggest there is a there there. For instance, in 2012, the Wall Street Journal found companies like Staples and Office Depot were showing different customers, different prices for the same product. And they did that based on things like their location and browsing history.

[Darren Woods]

In 2015, the investigative news outlet ProPublica found the Princeton Review showed people different prices for online tutoring based on their zip code. And the result was that people living in areas with a bigger Asian population might have paid hundreds of dollars more for the same service.

[Adrian Ma]

But these smoking guns are hard to find, in part because what companies do with our data is sort of a black box. And Even though the FTC's investigation promised to shed more light on the practice, the that investigation seems to be on pause. After President Trump took office and installed new leaders at the agency, we repeatedly reached out to the FTC for an interview for this piece, and each time a spokesperson for the agency said it has no comment. So what does Sam Levine think about all this?

[Sam Levine]

I really think the FTC's seeming inaction and lack of attention to this issue is quite worrying. And I think it's why states really need to step up.

[Darren Woods]

And some states are. New York recently passed a bill requiring businesses to disclose when they're offering customers personalised algorithmic pricing.

[Adrian Ma]

In their words.

[Darren Woods]

Lawmakers in Georgia, Colorado, California and Ohio have also proposed regulating or banning the practice.

[Adrian Ma]

Still, some experts, like Jean Pierre Dube, are skeptical of this rush to regulate.

[Jean Pierre Dube]

The concept of a company using data that I wasn't aware they had to determine a marketing offer for me. I don't think that's all that new.

[Darren Woods]

Jean Pierre is a professor of marketing at the University of Chicago who studied personalized pricing, calling things surveillance.

[Jean Pierre Dube]

Pricing is just a way of branding it in a very negative light so that people would have a hard time wanting to defend it, because how could surveillance ever be good in a free country like America?

[Darren Woods]

Good point. It does not sound good.

[Adrian Ma]

Jean Pierre prefers a more neutral term like personalized or differential pricing, and he says it's not unusual for businesses to consider a customer's attributes and tailor prices accordingly. For example, think of a car dealer who sees a customer walk into the showroom with a fancy suit and a gold watch on. They might decide to charge them a little more because, you know, it seems like they can afford it.

[Darren Woods]

Yeah, classic haggling. But he says personalized pricing doesn't always mean higher prices.

[Jean Pierre Dube]

If I have the data that allows me to know what people's willingness to pay are, there's just as much interest in me lowering my prices to some people to serve customers that would otherwise not have purchased. So as long as I can charge you more than my cost of supplying to you, this is additional profits I collect. So some people will pay more, some people will pay less.

[Adrian Ma]

To illustrate, Jean Pierre told us about an experiment he and a colleague ran with ZipRecruiter, a company that makes money selling job matching services to employers. And what they found was when ZipRecruiter tailored their pricing to different customers based on data they provided. More than 60% of them were offered a lower price than they would have gotten if the company had just charged everyone the same flat fee.

[Jean Pierre Dube]

Most of these people being charged less were the smallest businesses. And so if you think small businesses deserve special advantages over large companies, then you would argue this seems a lot more equitable and fair.

[Darren Woods]

Now it's important to note in this experiment, customers provided their data voluntarily, and that's different from the secretive, involuntary data collection critics of surveillance or personalised pricing talk about. And on this particular point, Jean Pierre says he gets it.

[Jean Pierre Dube]

I think we have to be very careful about saying that charging differentially is unfair, but I would definitely agree with you that it feels like consumers are losing the agency over their personal information.

[Darren Woods]

On that note, if you're concerned about all of this, there are a few things that experts suggest you can do to lessen your exposure, like regularly clearing your web browsers.

[Adrian Ma]

Cash seems pretty easy.

[Darren Woods]

You could use a private browser or a vpn.

[Adrian Ma]

Inconvenient but doable.

[Darren Woods]

Or go to a physical store and buy things in cash.

[Adrian Ma]

That's going too far.

[Darren Woods]

This is Adrian's populist revolt. This episode was produced by Angel Carreras and engineered by James Willits. It was fact checked by Sarah Juarez. Cake and Canon edits the show and the indicator is a production of npr.

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