Washington, D.C. — As a nationwide push against surveillance pricing grows, the American Economic Liberties Project today released a brief — “Minding the Gaps in Surveillance Pricing Reform” — laying out how to make sure bans against the exploitative practice actually protect consumers and aren’t riddled with industry-approved carveouts that continue to let pricing abuses continue. 

“Surveillance pricing laws cannot afford to be watered down by industry carveouts that preserve the very practices they are meant to stop,” said Lee Hepner, Senior Counsel at the American Economic Liberties Project. “If lawmakers want to give consumers meaningful protection, they need to close the loopholes that allow corporations to disguise discriminatory pricing while claiming they have banned it.”

“Consumers deserve a real, transparent price — not a targeted price quietly generated from hidden profiles built by mining troves of their personal data,” said Stephanie T. Nguyen, Senior Fellow at Columbia Law School and former chief technologist of the Federal Trade Commission. “We can protect legitimate discounts and loyalty programs without handing corporations a roadmap for continuing surveillance pricing.”

Over the last few years, lawmakers across federal, state, and local jurisdictions have introduced a growing number of bills aimed at banning surveillance pricing, a discriminatory practice where, as Nguyen lays out in a recent New York Times op-ed, firms use vast troves of private data to tailor higher prices for individual customers. But across these jurisdictions, the same corporate carveouts keep reappearing, producing laws that purport to solve a problem while in fact granting permission for pricing abuses, as happened in Maryland. 

The brief identified five of the most common loopholes that weaken and derail reform:

1. Loyalty programs: Broad loyalty-program exemptions can let companies use personal data to secretly vary prices or rewards among members, turning legitimate rewards programs into vehicles for discriminatory surveillance pricing.
2. Personalized discounts: Exempting personalized discounts effectively allows companies to charge individualized prices based on consumers’ data, since consumers cannot tell whether an offer is a genuine discount or simply the highest price an algorithm predicts they will pay. 
3. Subscriptions: Exempting subscription pricing could allow companies to use detailed consumer data to discriminate among subscribers, including by exploiting retention offers and differences in individual willingness to pay.
4. Consumer segmentation: Defining surveillance pricing as pricing for individual consumers leaves a loophole for companies to use personal data to charge different prices to small groups, tiers, or segments of consumers. 
5. Higher prices: Banning surveillance pricing only when it produces a “higher price” is difficult to enforce because there may be no clear baseline price, and the technology’s fundamental purpose is to maximize what each consumer will pay.

Read the full brief “Minding the Gaps in Surveillance Pricing Reform,” here.

Read Stephanie Nguyen’s recent New York Times op-ed “Surveillance Prices. Hidden Fees. Shifting Costs. This Madness Must Stop,” here.

Learn more about Economic Liberties here.