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What is 'surveillance pricing,' and is it forcing some consumers to pay more? FTC investigates

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What is 'surveillance pricing,' and is it forcing some consumers to pay more? FTC investigates

It’s no secret that Californians pay more than the rest of the country for many goods and services — gas, housing, food, you name it. That’s part of the high cost of living in this state.

What’s less well known, though, is that consumers may be paying higher prices than their neighbors pay.

Tech firms and consultants have been offering companies the ability to set “personalized” prices online based on a customer’s ability or willingness to pay, using algorithms and artificial intelligence to sift through mountains of data to help maximize sales and profits. Advocates say the technology simply takes the principle of efficient pricing to its logical extreme; critics say it’s unfair, discriminatory and a perversion of free-market capitalism.

On Tuesday, the Federal Trade Commission launched an investigation that aims to determine how widespread this kind of “surveillance pricing” has become and what its effects have been. The five commissioners voted unanimously to order eight financial, tech and consulting companies to reveal what pricing services they offer, what data they collect to power these services, who is using their services and what effect that’s having on consumer prices.

FTC Chief Technology Officer Stephanie Nguyen said in an interview that the agency knows companies “are collecting massive amounts of data about consumers,” including very detailed, sensitive data about their demographics, where they go, what they look for and what they buy. The agency also knows that companies are able to use these data to specifically target information to individuals or groups.

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Its new inquiry, she said, aims to determine whether, how and how often such data are being deployed to set prices. She added that the agency is just gathering information at this point, and that none of the companies are being accused of any wrongdoing.

Privacy advocates welcomed the investigation.

“This study is such a critical first step in a really important conversation about what we think the rules should be around pricing — what we think the norm should be,” said Lindsay Owens, executive director of Groundwork Collaborative, an economic policy think tank.

Rather than setting prices based on supply and demand, surveillance pricing looks at indicators of your ability and willingness to pay, such as your credit card and bank balances, or “whether it’s late at night and you’re looking for an Uber home,” said Lee Hepner, senior legal counsel for the American Economic Liberties Project.

“We have heard allegations that some companies are now able to charge you a different price based on how close you are to your next payday, or if you just got paid,” he said.

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The eight companies ordered to submit information to the FTC are financial industry titans Mastercard and JPMorgan Chase, consultancies Accenture and McKinsey & Co., and tech companies Revionics, Bloomreach, Task Software and PROS.

JPMorgan Chase said Tuesday that it hadn’t heard from the agency yet. Mastercard said it would cooperate in the process, and the other six companies did not respond to requests, or could not be reached, for comment.

The unanimous vote of the commission reflects a bipartisan interest in exploring the issues around pricing based on personal data, which in turn mirrors public sentiment about online privacy. A survey last year by the Pew Research Center found that 81% of respondents were concerned about how companies use the data collected about them, and 67% had little to no understanding about what companies did with their data.

One of the threats posed by surveillance pricing is that it gives companies an incentive to collect even more data about customers because the information might be useful in these pricing systems, said R.J. Cross, the director of the consumer privacy program at the U.S. Public Interest Research Group.

“The overcollection of data already comes with security and privacy issues,” she said; the more data that’s collected, the more likely it is that the information will be exposed in a breach or hack. “It’s just going to add fuel to a fire that may have big, negative consequences for all of us down the line.”

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Owens said another issue is how surveillance prices erode the longstanding practice of having a public price, which emerged when retailers stopped haggling over everything and started putting price tags on their goods. Public prices are important, Owens said, because they help ensure fairness and are transparent and predictable.

The absence of predictable prices, Hepner said, makes it hard for people to budget for what they need.

George Slover, senior counsel for competition policy at the Center for Democracy & Technology, said “bespoke pricing” amounts to an extreme reversal of a system that has worked for consumers since the advent of the price tag. Instead of sellers offering goods and services to anonymous buyers, he said, “the seller knows everything about the buyer, and what they are likely, willing and able to pay” — while keeping the buyer in the dark about what the seller is charging everyone else.

“It inverts, or you might say perverts, the assumptions at the very foundation of the justification for the free market,” he said.

The use of AI to power surveillance pricing systems is a potential hurdle to the FTC’s inquiry, observers say, because the systems’ inner workings may be difficult to unpack and understand.

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“It makes the job a lot harder if the people who are making the AI systems can’t even clearly articulate why a system is making a decision,” Cross said. “That really puts regulators at a disadvantage.”

The legal landscape is murky, too.

There are federal laws that prohibit charging discriminatory prices in certain circumstances — for example, when people are charged different rents or mortgage interest rates based on their race — but Hepner said surveillance pricing may represent “a new frontier in price discrimination” not reached by those statutes.

The FTC may have the power to rein in surveillance pricing, though, if the agency determines that it violates the federal law against unfair and deceptive practices. And in Owens’ view, it is by nature deceptive because it’s done in secret — you don’t know you’re paying more online than someone else for the same goods, so “you have no idea that you should be upset.”

“Isolation and obfuscation,” she added, “are really essential to the practice.”

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Why Kroger is closing 60 stores: 'One hit after another'

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Why Kroger is closing 60 stores: 'One hit after another'

After a series of setbacks, Kroger’s recent decision to close 60 locations nationwide is the latest sign of distress for the grocer that operates more than 300 stores in California.

Kroger, the parent company of Ralphs and Food 4 Less, is reducing its footprint after the resignation of its chief executive and a failed merger with competing grocery giant Albertsons. The company faces a lawsuit related to the merger and also has been struggling with labor unrest.

Employees had been threatening to strike until the company reached a tentative agreement with the United Food and Commercial Workers union this week.

Based in Cincinnati, Kroger also owns Harris Teeter, King Soopers and Dillons. The company operates more than 2,700 stores under different brands across the country and offers fresh goods, some household items and pharmacy services.

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“Instead of popping champagne and toasting to their merger, Kroger is instead just enduring one hit after another,” said Jeff Wells, lead editor at the trade publication Grocery Dive. “They’re still a pretty stable business, but they’re facing a lot in terms of challenges.”

Impending closures

Kroger announced late last month in its quarterly earnings report that it plans to close 60 stores over the next 18 months. The company did not disclose which locations would be shut down.

“We’re simplifying our business and reviewing areas that will not be meaningful to our future growth,” interim Chief Executive Ronald Sargent said in an earnings call. “Today, not all of our stores are delivering the sustainable results we need.”

Kroger temporarily paused routine store closures while the Albertsons merger was pending, Sargent said. The company normally closes about 30 stores per year, Melius Research analyst Jacob Aiken-Phillips said.

The company is on track to complete 30 major store projects this year and expects to accelerate store openings in 2026, Sargent said on the earnings call.

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Competitive market

Kroger is under increasing pressure from competitors, experts said, some of which offer a wider range of items and convenient one-stop shops.

“Kroger faces this intensely competitive field in the grocery industry,” Wells said. “From Walmart to Costco to Whole Foods and Sprouts Farmers Market, everybody in the industry is kind of gunning for them.”

The Albertsons merger would have given Kroger the scale to compete with giants such as Walmart and Amazon, Aiken-Phillips said.

“After the merger failed, they had to reexamine their strategy and focus on how they can grow and compete without that scale,” he said. “That’s the major challenge right now.”

Kroger relies on pharmacy services, advertising and e-commerce for additional revenue, experts said. Although the company grew its e-commerce business 15% in the first quarter of this year, the business remains unprofitable.

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A chief executive shuffle

Former Kroger CEO Rodney McMullen stepped down in March after an investigation into his personal conduct, the company announced. Sargent was appointed chairman of the board of directors and interim CEO.

Kroger did not share details of the investigation into McMullen. His “personal conduct, while unrelated to the business, was inconsistent with Kroger’s Policy on Business Ethics,” the company’s statement said.

“When he resigned, it threw a wrench in progressing the company because now you need a new leader to come in,” Aiken-Phillips said.

A failed merger

In 2022, Kroger agreed to buy Albertsons for $24.6 billion, a sale that would have been the largest supermarket merger in U.S. history.

The Federal Trade Commission, California and several other states sued to stop the merger, arguing that it would hobble competition in many parts of the country, leaving customers at the mercy of a newly formed behemoth and driving up prices. Kroger and Albertsons collectively own about 5,000 grocery stores.

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In late 2024, Albertsons scrapped the deal after a federal judge in Oregon issued a preliminary injunction in the case. The high-stakes court battle centered on concerns that the megamerger would add to the financial woes of consumers who have grappled with the rising cost of food.

Albertsons also sued Kroger, claiming that the grocer didn’t do enough to win over regulators. Kroger has since countersued.

Ongoing labor unrest

In June, grocery workers at Albertsons and Kroger — numbering about 45,000 — voted to authorize a strike to protest what they called unfair labor practices. A walkout would have caused a major disruption for two of the nation’s largest grocery chains during the busiest season of the year.

The United Food and Commercial Workers union announced Thursday that it reached a tentative agreement with the two companies that would allow them to avoid a strike. The union will vote on whether to approve the agreement July 9-11.

“Following an intense 40 plus hour bargaining session that began on Friday morning, we’ve secured an agreement that addresses our priorities,” the union said in a statement.

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The agreement includes higher wages, improved pension plans as well as health and welfare improvements, the union said. Kroger did not respond to requests for comment.

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See How Trump’s Big Bill Could Affect Your Taxes, Health Care and Other Finances

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See How Trump’s Big Bill Could Affect Your Taxes, Health Care and Other Finances

Congressional Republicans just passed President Trump’s sprawling domestic policy bill that extends and expands tax cuts, while slashing Medicaid, food benefits and clean energy initiatives to pay for them — but only partly. The bill favors the wealthy, and low-income Americans stand to lose the most.

What could the bill mean for your pocketbook? Answer these questions to learn more about the individual impacts of the wide-ranging legislation. (Your answers are not tracked by The Times.)

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Jump to a section:

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At the heart of the bill is a roughly $4 trillion tax cut that extends the cuts Republicans passed in 2017. Without this extension, most Americans would see a tax increase.

These tax cuts come at a cost. According to the Congressional Budget Office, the bill adds $3.3 trillion to the national debt over the next decade.

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Do you pay federal income taxes?

Do you take the standard tax deduction?

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Are you 65 or older?

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Do you live in a high-tax state like California or New York?

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Are you a tipped worker?

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Do you receive overtime pay?

Do you plan to buy a car?

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Do you pay interest on a mortgage?

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Have you experienced a big loss because of a storm, fire or other disasters?

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Do you donate to charity?

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Do you earn more than $500,000 a year?

Do you own a business?

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Do you own or are you considering buying firearms?

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Are you a whaling captain or a fisher living in Alaska?

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Despite reducing or eliminating certain safety net programs, the Trump administration has been exploring several options to encourage Americans to have more children, including tax cuts and other investments.

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Do you have children?

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Are you planning to have a baby soon?

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Do you intend to adopt a child?

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Will you inherit wealth or business worth $15 million or more soon?

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To offset some of the tax cuts, the bill makes steep cuts to health care and food assistance benefits for low-income Americans.

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Are you on Medicaid?

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Do you use food stamps?

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Do you have health insurance under Obamacare?

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Do you have a health savings account, or want one?

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The bill adds limits to student loan borrowing and makes changes to financial aid eligibility and uses.

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Have you already taken or will soon take out federal loans for college?

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Do you plan to borrow money for your child’s college education?

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Do you hope to borrow money for graduate school?

Do you have a 529 savings account?

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Are you filling out the FAFSA?

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Do you plan to apply for a Pell Grant?

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Do you or your children attend a university with a large endowment?

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The bill rolls back tax credits for clean energy, a policy Mr. Trump campaigned on.

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Are you planning to make energy-efficient home improvements?

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Do you want to buy an electric or a plug-in hybrid vehicle?

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The bill has prioritized additional funding for immigration enforcement, and specifically includes collecting more fees from certain noncitizens.

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Are you a noncitizen without a green card?

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Are you an immigrant who sends money abroad to friends or family?

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Your results

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1.

Preserve existing tax brackets

2.

Extend and increase standard tax deduction

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3.

Increase tax deductions for seniors

4.

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Increase cap on state and local tax deductions

5.

Add tax deduction for income from tips

6.

Add tax deduction for overtime income

7.

Add tax deduction on auto loan interest

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8.

Preserve limit on mortgage interest deduction

9.

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Preserve restrictions on loss deduction

10.

Add tax deduction for donating to charity

11.

Extend alternative minimum tax exemption

12.

Increase tax deductions for pass-through businesses

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13.

Eliminate a tax on silencers and certain firearms

14.

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Add tax breaks for Alaskan whalers and fishers

15.

Increase child tax credit, with tightened rules

16.

Deposit $1,000 into a “Trump account” for newborns

17.

Make adoption tax credit refundable

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18.

Extend and increase estate tax exemption

19.

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Add work requirements for Medicaid

20.

Add work requirements for food stamps

21.

Tighten Obamacare rules

22.

Expand HSA access to more people

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23.

Eliminate tax credits for low-emissions electricity sources

24.

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Eliminate tax credits for clean energy vehicles

25.

Restructure student loan repayment programs

26.

Limit Parent PLUS loan amounts

27.

Limit graduate school loan amounts

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28.

Expand eligible 529 expenses

29.

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Remove some assets from financial aid calculations

30.

Change eligiblity rules for Pell Grants

31.

Increase taxes on university endowments

32.

Add and increase immigration fees

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33.

Add a tax on money sent abroad

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Commentary: With 'Alligator Alcatraz,' Trump and DeSantis define their immigration policy as a tragic farce

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Commentary: With 'Alligator Alcatraz,' Trump and DeSantis define their immigration policy as a tragic farce

Just as you may have thought that it was finally safe to think about American politics without thinking about Florida’s Republican governor, Ron DeSantis, he has slinked his way into the national news again.

The occasion was a tour he hosted Tuesday for Donald Trump and Homeland Security Secretary Kristi Noem of what has become known as “Alligator Alcatraz,” a detention camp hastily erected in the Everglades to hold immigration detainees in tents and within chain-link cages.

(Environmental groups already have filed lawsuits about the camp’s encroachment into the environmentally sensitive Everglades.)

Individuals with brown skin are approached or pulled aside by unidentified federal agents, suddenly and with a show of force, and made to answer questions about who they are and where they are from.

— Perdomo v. Noem

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The day before the tour, DeSantis cackled over the conditions awaiting detainees in the camp located about 45 miles west of Miami amid swamps inhabited by pythons and alligators. “Good luck getting to civilization,” he said. “So the security is amazing — natural and otherwise.”

Trump seconded that view during the tour: “We’re surrounded by miles of treacherous swampland and the only way out is, really, deportation,” he said.

DeSantis, whom Trump humiliated during their campaigns for the GOP presidential nomination in 2024 as “Ron DeSanctimonious,” basked in his apparent return to Trump’s favor.

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One could hardly put matters better than Nicole Lafond of Talking Points Memo, who described how DeSantis and Trump came together over their “shared passion: finding creative new ways to dehumanize immigrants, carried out with a trollish flair.”

As it happens, the tour took place the day before immigrant advocates and several people swept up in immigration raids described in a federal court filing the behavior of Immigration and Customs Enforcement agents conducting the raids, as well as the atrocious conditions in which the detainees are held in an ICE facility in downtown Los Angeles.

That filing documents the continuum of immigration enforcement under the Trump administration nationwide.

In Florida, officials boast of the cruelty of holding detainees in a swamp before their immigration status is adjudicated — Noem stated that detainees would be offered forms to self-deport at the very entrance to the camp.

In California, “individuals with brown skin are approached or pulled aside by unidentified federal agents, suddenly and with a show of force, and made to answer questions about who they are and where they are from,” according to the filing. “If they hesitate, attempt to leave, or do not answer the questions to the satisfaction of the agents, they are detained, sometimes tackled, handcuffed, and/or taken into custody.”

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Then they’re held in the “dungeon-like” L.A. facility, sometimes for days, and often “pressured into accepting voluntary departure.”

A Homeland Security spokesperson called the assertions in the filing “disgusting and categorically false.” The spokesperson told me by email, “Any claim that there are subprime conditions at ICE detention centers are false.”

More on that in a moment. First, a quick review of how DeSantis, like other GOP politicians, has exploited immigration and other hot-button issues for political advantage.

On the national level, this began as a campaign against pandemic lockdowns and mask mandates — at one point while COVID was raging across his state, DeSantis publicly upbraided schoolchildren for wearing masks at a presentation, calling it “COVID theater.” He progressed to questioning the safety of COVID vaccines and to trying to demonize Anthony Fauci, then the most respected public health official in the land.

The ultimate harvest was one of the worst rates of COVID deaths in the nation. DeSantis’ defenders explained that this was because Florida has a high proportion of seniors, but couldn’t explain why its rate was worse than other states with even higher proportions of elderly residents. He pursued attacks on LGBTQ+ people through an “anti-woke” campaign, though judges ruled against his efforts to legislate how teachers and professors did their jobs.

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DeSantis tried to take his show on the road via a quest for the presidential nomination, but his culture warfare didn’t obscure his maladroit skills on the stump. (I once described DeSantis as having “all the charisma of a linoleum floor,” after which The Times received an indignant letter from a reader asserting that I owed linoleum an apology.)

But his policymaking has long ceased to be a laughing matter, especially when it comes to immigration.

In February, DeSantis signed a law making it a felony for an undocumented immigrant to enter the state of Florida. That law was blocked in April by federal Judge Kathleen M. Williams of Miami, who subsequently found state Atty. Gen. James Uthmeier in contempt for indicating to law enforcement officers that they didn’t have to comply with her order.

The cruelty-for-cruelty’s-sake nature of Trump’s immigrant crackdown is vividly illustrated not only by his glee over the Everglades camp, but also the brutality of the ICE raids as depicted by the plaintiffs in the Los Angeles lawsuit.

The plaintiffs in the class action include five individuals (among them two U.S. citizens) who were detained in the raids, the United Farm Worker and three immigrant advocacy organizations.

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Since early June, Southern California “has been under siege,” the lawsuit asserts. “Masked federal agents, sometimes dressed in military-style clothing, have conducted indiscriminate immigration operations, flooding street corners, bus stops, parking lots, agricultural sites, day laborer corners, and other places, setting up checkpoints, and entering businesses, interrogating residents as they are working, looking for work, or otherwise trying to go about their daily lives, and taking people away.”

The plaintiffs ascribe this behavior to a quota of 3,000 immigration arrests per day set by presidential aide Stephen Miller. “It is practically impossible to arrest 3,000 people per day without breaking the law flagrantly,” Mohammad Tajsar of the ACLU of Southern California, which represents the plaintiffs, told me.

The lawsuit cites reporting by my colleague Rachel Uranga that, although the administration describes the raids’ targets as “the worst of the worst,” most of those nabbed had never been charged with a crime or had no criminal convictions.

Of the five individual plaintiffs, three were arrested at a bus stop while waiting to be picked up for a job, one — a U.S. citizen — at an Orange County car wash and one at an auto yard where he says he was manhandled by agents even after explaining that he is a U.S. citizen.

The agents’ refusal to identify themselves and give detainees the reason for their arrest violates legal regulations, the lawsuit states.

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As the lawsuit describes the L.A. holding location, the basement of a federal building downtown, it’s not designed for long-term detention. It lacks beds, showers and medical facilities. The detainees are held in rooms so overcrowded that they “cannot sit, let alone lie down, for hours at a time.” Lawyers and families have often been prevented from seeing them the plaintiffs say.

A 2010 settlement of a previous lawsuit stipulated that detainees would not be held in the facility for more than 12 hours, and that they be permitted to meet with their lawyers for at least four hours a day seven days a week. Some detainees have been held there for days.

The settlement has since expired; the plaintiffs say “the unlawful conditions that led to the settlement more than a decade ago are recurring today.”

Make no mistake: None of this is accidental or unavoidable. Trump’s comments during his tour of the Everglades camp, and the actions of immigration agents in L.A. — many of which have been documented by onlookers’ videos — make clear that sowing fear among people trying to go about their daily lives is high among the goals of what has become a theatrical anti-immigrant farce. It’s no less tragic for that.

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