The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
The inquiry involves eight firms: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. On Tuesday, these companies received requests from the FTC for information about how their pricing practices affect privacy, competition, and consumer protection.
These companies engage in a technique known as “surveillance pricing” or “dynamic pricing,” which allows them to display different prices for the same products based on individual consumer attributes such as location, demographics, credit history, and shopping behavior.
Notably, many of the firms under investigation provide transaction and pricing services to some of the largest businesses in the United States and internationally. Task Software is involved with major hospitality brands like McDonald’s and Starbucks, while Revionics delivers pricing analytics and optimization software to numerous major retailers, including Home Depot. Pros also offers AI-driven pricing solutions and has clients such as Nestlé, HP, and United Airlines, and it collaborates with Microsoft on technology development.
The FTC aims to unravel what it describes as an “opaque market” that classifies consumers and determines targeted pricing for various goods and services.
FTC Chair Lina Khan noted, “Firms that harvest Americans’ personal data can put people’s privacy at risk. 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.”
The agency is seeking details in four primary areas: the types of surveillance pricing products and services offered by these companies, their data collection methods, customer and sales data, and how these surveillance practices impact the prices that consumers ultimately pay.