FTC steps up pricing scrutiny of Walmart, Uber, other consumer companies

The news: The Federal Trade Commission (FTC) is stepping up scrutiny of how consumer-facing companies set and communicate prices, putting retailers and other businesses on notice that their pricing practices could face closer examination.

On Wednesday, the agency ordered nine companies, including Walmart, Target, Delta Air Lines, and Uber, to detail how they use consumers’ personal data to set individualized prices and gig workers’ pay. Days earlier, the agency and 20 states sued Dollar General, alleging it repeatedly charged shoppers more at checkout than advertised.

Zooming in: Delta, United, and JetBlue must explain whether loyalty programs or personal data factor into ticket prices; Walmart and Target face questions about individualized pricing; and Uber, Lyft, DoorDash, and Instacart must detail how they set customer prices and whether workers’ personal data and behavior affect compensation.

FTC Chairman Andrew Ferguson said the commission intends to scrutinize the “opaque methodology” companies may use to determine consumer prices and worker pay. Companies have 45 days from receipt of the orders to respond.

The Dollar General lawsuit centers on discrepancies between advertised prices and what shoppers pay. The complaint accuses the retailer of repeatedly overcharging customers despite widespread complaints and knowledge of the problem. Dollar General disputes the allegations, saying it has bolstered pricing controls.

Why this matters: Retailers are investing in sophisticated pricing technology, even as consumers become more skeptical about whether they’re getting a fair deal. Nearly two-thirds of US adults are concerned about personalized pricing, per Talker Research.

The latest actions follow an August FTC proposal warning that companies could violate federal law by using personal data to set individualized prices without adequately disclosing those practices. States including Maryland, Connecticut, and New York have moved to put restrictions on personalized pricing.

Implications for retailers and consumer brands: Companies using customer data and algorithms to tailor prices may face greater pressure to explain how those prices are determined and ensure shoppers aren’t misled. Retailers need to make sure advertised prices match what is paid at checkout, particularly as they manage pricing across physical stores and digital channels.

This content is part of EMARKETER’s subscription Briefings, where we pair daily updates with data and analysis from forecasts and research reports. Our Briefings prepare you to start your day informed, to provide critical insights in an important meeting, and to understand the context of what’s happening in your industry. Non-clients can click here to get a demo of our full platform and coverage.

You've read 0 of 2 free articles this month.

Get more articles - create your free account today!