Gig workers have long wondered whether accepting one bad gig leads to getting inundated with nothing but more poorly paid job offers. Now the Federal Trade Commission’s Labor Task Force is trying to find out whether that’s true. The agency suspects gig company algorithms secretly collect data that’s used to shaft gig workers. And the agency would like to curtail the process.
Tasked with policing false advertising claims — including fake wage promises — the FTC has ordered nine companies to hand over information about how they determine gig wages. These companies include Lyft, Uber, DoorDash and Instacart. At the heart of this issue are whether gig company algorithms use individual workers’ job acceptance data to deliver low-ball offers to the workers who seem the most desperate and likely to accept them.
Consumers are ripped off too
In the same sweeping move, the agency is examining whether consumers are also getting ripped off. Are airlines and retailers spying on consumer search habits to create “personalized pricing” models that charge more to the seemingly most anxious buyers?
“We intend to scrutinize the opaque methodology that some companies may be using to determine how much consumers pay or how much gig workers are paid for the same product or service,” said FTC Chairman Andrew N. Ferguson. “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.”
Airlines, ride share and delivery
The agency ordered several airlines, ride-sharing companies and food-delivery firms to provide detailed information that will allow it to study the use of personal data to set prices and compensation.
The orders were issued to Delta, United, JetBlue, Lyft, Uber, DoorDash, Instacart, Target and Walmart. In addition to retail stores, Target and Walmart operate gig delivery services Spark and Shipt, respectively.
The discovery request is broad. The FTC is asking for any and all information that will allow it to assess whether the pricing for a product or service varies from one person to the next based on analysis of personal data by AI algorithms. If a company fails to turn over the required information, the Commission has the power to compel compliance in federal court.
Opaque formulas
The information requests from the airlines are primarily focused on how they price tickets for customers. However, the agency is looking at both pricing and employment practices for the other companies.
It’s no secret that ride-sharing and food-delivery companies offer their workers pay that shifts based on opaque formulas. And the FTC says it has no problem with companies changing prices and job offers based on supply and demand. That’s both commonplace and expected.
What isn’t expected is if the sites’ algorithms alter compensation offers based on mining their drivers’ personal data, such as their phone usage or acceptance history. In other words, if you accept one low-ball shop from Instacart, is Instacart then more likely to present you with nothing buy similarly miserable gigs?
The FTC’s document demand asks these companies to provide all of the factors and weights involved in their compensation formulas.
It’s worth noting that the FTC has been investigating “personalized pricing” for years. And, in an enforcement policy statement issued earlier this year, it said that these formulas may well violate fair trade practices.
“Consumers expect prices for products and services to change based upon supply and demand, not their web surfing habits or buying history,” the agency said. “Undisclosed collection or use of personal data for the purpose of personalized pricing could violate the FTC Act, which prohibits unfair or deceptive practices in the marketplace.”
The nine companies subject to this order have 45 days to respond. Stay tuned.
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