The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their practices involving customer data, algorithms, and artificial intelligence in relation to personalized pricing strategies.
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On Tuesday, the FTC issued information requests to eight firms — Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros — to assess how these pricing strategies affect consumer privacy, competition, and overall consumer protection.
These companies utilize various data tools, including AI, to implement a pricing strategy known as “surveillance pricing” or “dynamic pricing,” which allows them to present different prices to consumers based on individual characteristics or behaviors. Factors such as location, demographics, credit history, and shopping history may influence these tailored prices.
The firms targeted by the FTC play significant roles in transaction management and pricing services for major corporations both in the U.S. and internationally. Task Software manages transactions for well-known hospitality brands like McDonald’s and Starbucks. Revionics offers pricing optimization software and analytics to major retailers including Home Depot. Pros, known for its AI-driven pricing solutions, works with clients such as Nestlé, HP, and United Airlines and collaborates with Microsoft on technological development.
The FTC aims to investigate the complexities of this “opaque market,” which involves categorizing consumers and establishing targeted pricing for various goods and services.
FTC Chair Lina Khan emphasized the potential risks these practices pose to consumer privacy and the possibility of businesses profiting from detailed consumer data to impose higher prices. She stated, “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.”
The Commission is specifically seeking information regarding the types of surveillance pricing products each company offers, data collection methods, customer and sales data, and the impact of these practices on consumer pricing.