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'Woah!': FTC Applauded for Launching Inquiry Into Surveillance Pricing
"Firms that harvest Americans' personal data can put people's privacy at risk," FTC Chair Lina Khan said. "Now firms could be exploiting this vast trove of personal information to charge people higher prices."
Jul 23, 2024
The U.S. Federal Trade Commission on Tuesday launched an investigation into surveillance pricing and requested information from eight companies on the practice.
The FTC inquiry will look at the effect of surveillance pricing—using data on consumers' behavior or characteristics to manipulate the price for them as individuals—on privacy, competition, and consumer protection.
The agency asked Mastercard, JPMorgan Chase, Accenture, and McKinsey for information on the practice, as well as four less well-known companies that service major corporations.
"Firms that harvest Americans' personal data can put people's privacy at risk," FTC Chair Lina Khan said in a statement. "Now firms could be exploiting this vast trove of personal information to charge people higher prices."
"Americans deserve to know whether businesses are using detailed consumer data to deploy surveillance pricing, and the FTC's inquiry will shed light on this shadowy ecosystem of pricing middlemen," she added.
1. Firms harvest a trove of Americans’ personal data, from your browsing history to your biometrics. Now firms could be using this data to target you with an individualized price.
Today @FTC launched an inquiry into these surveillance pricing tactics. https://t.co/G4uc8lHWOV
— Lina Khan (@linakhanFTC) July 23, 2024
Progressive advocacy groups, which have long considered Khan to be one of their strongest allies in the Biden administration, and which argue that discriminatory pricing is unfair, celebrated the FTC's announcement.
"We're thrilled to see the FTC crack down on the dystopian practice of surveillance pricing," Lee Hepner, legal counsel at the American Economic Liberties Project, said in a statement. "It's chilling to think that companies have so much control over our lives that they can leverage personal data they've harvested—including your location, demographic, and shopping history—to turn our habits against us and hike up prices on essential goods. But it's already happening."
Groundwork Collaborative executive director Lindsay Owens also praised the FTC move, warning that "a personalized price might sound nice, but it is actually a three-part corporate strategy to spy on you, isolate you, and overcharge you."
"Today's investigation is an important step in cracking down on the methods big corporations use to spy on consumers to rip them off," Owens said in a statement.
Emily Peterson-Cassin, a director at Demand Progress Education Fund, said in a statement that Tuesday's announcement was "another strong sign that the FTC is fighting for consumer power over corporate power."
Zephyr Teachout, a law professor at Fordham University who has helped lead the opposition to surveillance pricing, reacted with excitement on Tuesday.
"Woah!" she wrote on social media. "The FTC is going there! So excited to see the FTC launching a full study into how companies use data to serve different prices to different people. We know the incentive and capacity is there, but the reality of surveillance pricing has been a triple-locked black box!"
Advocates of surveillance pricing sometimes call it personalized pricing and argue that it efficiently allocates resources. Such pricing questions are the subject of great interest among business school academics, especially at elite institutions such as the Massachusetts Institute of Technology and Harvard University, according to a detailed article in The American Prospect last month.
A crackdown on the practice could conceivably have support across the political spectrum. Stock guru Jim Cramer of CNBC—a frequent and vociferous critic of Khan—praised the FTC's announcement on air on Tuesday, while expressing disbelief that he was doing so.
7/ Even @jimcramer agrees that surveillance pricing is not an honest or ethical way to treat customers.
“How could you live with yourself?” if you’re a business that uses this strategy, he asked this morning.
“That is a great report. I agree with [@FTC].” pic.twitter.com/23HEDk8Yqf
— American Economic Liberties Project (@econliberties) July 23, 2024
All five FTC commissioners, including two Republicans, voted to move forward with the investigation, which will focus on intermediary firms—"the middlemen enabling firms to algorithmically tweak and target their prices," according to a blog post the FTC also published Tuesday.
The requests for information don't indicate that the eight firms engaged in wrongdoing, but rather that they can be useful sources of information, an unnamed FTC official toldThe Hill.
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Progressive EU Lawmakers Oppose Former Shell Employee's Bid to Become Climate Chief
"We believe that we have to change the system, not the climate," said one lawmaker. "Wopke Hoekstra's track record represents the system."
Oct 04, 2023
Progressive members of the European Parliament on Wednesday said they would vote against two candidates to serve as the European Commission's top officials overseeing the government's Green Deal and climate action agenda, remaining steadfast in their opposition to the politicians' climate records, conflicts of interest, and statements on chemical regulations and arguing that "people and planet deserve better."
Members of the Left in the European Parliament group said they had voted against Wopke Hoekstra and Maroš Šefčovič in the Committee on Environment, Public Health, and Food Safety (ENVI) on Wednesday morning as the panel approved their bids for European Commissioner for Climate Action and Executive Vice President of the European Commission for the European Green Deal, respectively.
Hoekstra, a former employee of oil and gas giant Shell and fossil fuel-linked consultant group McKinsey, has garnered extensive criticism from the left-wing group and from dozens of civil society organizations due to his employment history.
"We believe that we have to change the system, not the climate," said Left MEP Silvia Modig of Finland. "Wopke Hoekstra's track record represents the system. We stand alongside civil society. Without a sense of urgency, we will continue on the same path we have for fifty years. Emissions will continue to grow, temperatures will continue to rise, and catastrophic climate events will persist."
"To entrust the helm of our climate policy to a former Shell employee, whose career trajectory clearly prioritizes profit over the planet, must serve as a wake-up call."
The full parliament is expected to hold a final vote on the commissioner-designates on Thursday, and with the Dutch Labour Party also indicating it would also vote against Hoekstra, Euronewsreported that "a political veto on either candidate is still possible."
The ENVI committee approved the two candidates two days after they were questioned extensively about their climate records and commitments.
Hoekstra and Šefčovič failed to garner the support of two-thirds of the committee members on Tuesday, as many lawmakers still had concerns about their commitments to carbon emissions reduction targets and other issues.
Hoekstra, who resigned as the minister of foreign affairs of the Netherlands last month, worked at Shell from 2002-04 and at McKinsey for a decade before entering government.
He claimed in his remarks to the committee this week that he now believes "fossil fuels must become history, the sooner the better," and that oil companies that have known about their activities' link to the climate crisis and have "sought to ignore the evidence" are "unethical."
He also promised to phase out fossil fuel subsidies and said he supports a target of slashing emissions by at least 90% by 2040—the lower end of a recommendation made earlier this year by the European Scientific Advisory Board on Climate Change, which said the bloc must cut greenhouse gas emissions by 90-95% by 2040 in order to limit planetary heating to 1.5°C this century.
Despite some of Hoekstra's climate pledges to the committee, said the Left, he "represents the fossil fuel lobby and does not convincingly demonstrate competence as a climate protector."
Hoekstra's bid to lead the E.U.'s climate agenda, said the Corporate Europe Observatory (CEO), represents the government's dismissal of 100,000 Europeans who have signed a petition opposing his candidacy and "is a symptom of a broader systemic issue: fossil fuel influence on our decision-making."
"To entrust the helm of our climate policy to a former Shell employee, whose career trajectory clearly prioritizes profit over the planet, must serve as a wake-up call," said the co-presidents of the Left, MEPs Manon Aubry of France and Martin Schirdewan of Germany. "It extends beyond the immediate concern of Hoekstra potentially reversing climate action; it symbolizes a broader issue of intertwining politics with fossil fuel interests. It's a call to fortify our political landscape, creating a firewall that safeguards decision-making for the greater good and minimizes undue influence of private interests."
The Left's concerns were bolstered last week by a letter to the ENVI committee signed by 50 groups including CEO, Global Witness, and Friends of the Earth International.
The groups warned that as minister of finance in the Netherlands, Hoekstra "pleaded against rapidly ending gas exploitation... despite the massive negative impacts gas drilling had on hundreds of thousands of citizens" and "personally blocked government plans for reducing nitrogen emissions that were aiming to bring Dutch policy measures in line with E.U. legislation on nature protection."
"If we want to prevent and mitigate climate disasters in the future, it is crucial that governments free themselves from the influence of the fossil fuel industry by introducing and implementing a conflict-of-interest framework," said the organizations. "Making a person with strong and long-time links with oil and gas interests responsible for E.U. climate policies is the wrong step."
Šefčovič's answers to the committee's questions this week also left progressive lawmakers dismayed, as he refused to commit to a timeline for toxic chemical regulations and and food sustainability rules.
"The Left does not consider that the commissioner has shown an awareness of the need to accelerate on the European Green Deal by failing to commit to deliver on critical promised legislative proposals in this mandate," said the group of Šefčovič, who currently serves at executive vice president of the European Green Deal, overseeing interinstitutional relations and foresight.
CEO noted that campaigners' objections to the two candidates pushed the ENVI committee to delay its approval this week and to demand transparency from Hoekstra about the clients he worked with at McKinsey.
"Bittersweet win for transparency. Conflict of interests firmly on the agenda," said CEO. "We will be watching."
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Oregon County Sues Big Oil and 'Misinformation Agents' Over Deadly 2021 Heatwave
"The heat dome was a direct and foreseeable consequence of the defendants' decision to sell as many fossil fuel products over the last six decades as they could and to lie to the county, the public, and the scientific community."
Jun 22, 2023
Two years after what experts called the "world's most extreme heatwave in modern history" devastated the Pacific Northwest, Oregon's Multnomah County filed a lawsuit against several fossil fuel giants and "their misinformation agents" in state court.
"This lawsuit is about accountability and fairness, and I believe the people of Multnomah County deserve both. These businesses knew their products were unsafe and harmful, and they lied about it," said Jessica Vega Pederson, the county chair. "They have profited massively from their lies and left the rest of us to suffer the consequences and pay for the damages. We say enough is enough."
The complaint names fossil fuel companies including BP, Chevron, ConocoPhillips, ExxonMobil, Koch Industries, and Shell, as well as the consulting firm McKinsey & Company and two trade associations: the American Petroleum Institute (API) and Western States Petroleum Association (WSPA).
The 2021 extreme heat event was linked to hundreds of deaths in the region and scientists said at the time it would have been "virtually impossible without human-caused climate change," which is notably driven by ongoing fossil fuel extraction and use.
"The heat dome that cost so much life and loss was not a natural weather event," the complaint stresses. "It did not just happen because life can be cruel, nor can it be rationalized as simply a mystery of God's will. Rather, the heat dome was a direct and foreseeable consequence of the defendants' decision to sell as many fossil fuel products over the last six decades as they could and to lie to the county, the public, and the scientific community about the catastrophic harm that pollution from those products into the Earth's and the county's atmosphere would cause."
In Multnomah County, the heatwave killed at least 69 people, caused property damage, and took a financial toll on local resources. The suit—which accuses the defendants of fraud, negligence, and creating a public nuisance—seeks $50 million in actual damages, $1.5 billion in future damages, and an abatement fund, estimated at $50 billion, to "weatherproof" the county.
"There are no new laws or novel theories being asserted here. We contend that the defendants broke long-standing ones, and we will prove it to a jury," said attorney and law professor Jeffrey Simon.
Along with his firm, Simon Greenstone Panatier, the county is represented by Thomas, Coon, Newton & Frost as well as Worthington & Caron.
"What is new about this case," explained attorney Roger Worthington, "is how the leadership of Multnomah County is utilizing irrefutable climate science to hold corporate polluters accountable for their role in causing a discreet and disastrous event, as well as recent wildfires."
According to Worthington:
We will show that fossil fuel-induced global warming is already costing Oregonians lives and treasure. We will show that the normal use of fossil fuel products over time has imposed massive external, unpriced, and untraded social, economic, and environmental costs on the county. We will show that they were aware of this price, and instead of fully informing the public, they deceived us. And we will ask a jury to decide if it is fair to hold the polluters accountable for these avoidable and rising costs.
We are confident that, once we show what the fossil fuel companies knew about global warming and when, and what they did to deny, delay, and deceive the public, the jury will not let the fossil fuel companies get away with their reckless misconduct.
As some local groups responded to the filing by urging Multnomah County to also "help us fight dirty, dangerous, and inequitable fossil fuel development" in the region, the new legal action was widely welcomed by climate campaigners.
Richard Wiles, president of the Center for Climate Integrity, said that with this suit, "Multnomah County has joined the growing ranks of local governments that are standing up to Big Oil and fighting to make these polluters pay for the catastrophic damage they knowingly caused and lied about for decades."
"While other communities are seeking to hold Big Oil accountable for the costs of hurricanes, rising seas, and wildfires," he highlighted, "Multnomah County is the first to demand that oil companies stand trial for fueling the devastating 2021 heat dome, which claimed lives and wreaked havoc across the Pacific Northwest."
"Communities should not be forced to pay the price for these catastrophic climate damages while the companies that caused the crisis perpetuate their lies and rake in record profits," Wiles added. "The people of Multnomah County deserve their day in court to hold Big Oil accountable."
Lawsuits that aim to hold the fossil fuel industry accountable for its planet-wrecking products and lies aren't the only climate-related cases currently moving through U.S. courts; Delta Merner at the Union of Concerned Scientists (UCS) on Thursday pointed to another legal battle—a historic climate trial in Montana, the result of 16 youth suing the state.
"Multnomah County residents are on the frontlines of devastating climate change impacts. Extreme heat and wildfires are taking a massive toll on the health, well-being, and livelihoods of community members and leaving scars that will last for generations," she said. "A growing body of attribution science is paving the way for real accountability, showing over and over that the fossil fuel industry bears a great deal of responsibility for the damage done. As the first constitutional climate lawsuit trial draws to a close in Montana, plaintiffs, advocates, and scientists are hopeful that our justice system will work effectively, informed by robust scientific evidence."
"Across the country and the world, climate litigation is helping communities resist the fossil fuel industry's attempts to further extend a dangerous, unjust, and destructive fossil fuel-dependent energy system and economy," added Merner, lead scientist at the UCS Science Hub for Climate Litigation. "While nothing can truly compensate for the lives lost, the homes destroyed, or the irreplaceable natural landscapes forever altered, legal avenues provide a glimmer of hope for justice. Climate litigation is a necessary mechanism to hold these corporations accountable for their callous disregard for the well-being of communities and the planet."
As DeSmognoted Thursday:
It is the first time that McKinsey & Company has been named as a defendant in a climate accountability lawsuit. It is also the first climate case to name the WSPA as a defendant; other climate cases filed by California communities have invoked the Big Oil trade association—which spent more than any other group lobbying in California last year—as a relevant nonparty.
McKinsey & Company has a sordid history of working with industries that have deliberately deceived the public about the harms of their products, from Big Tobacco to opioid manufacturers. The consulting firm has also served the fossil fuel industry.
Ben Franta, senior research fellow and head of the Climate Litigation Lab at the University of Oxford, suggested to DeSmog that firms that have done work for polluting industries may increasingly face such legal challenges.
"Fossil fuel majors have collaborated with ad agencies, public relations firms, and others over the decades to create misleading public communications campaigns," he said. "Much as the consulting firm McKinsey has faced liability in the context of opioid litigation, third parties beyond fossil fuel producers might conceivably face liability in the context of climate litigation."
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