The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
On Tuesday, the FTC issued orders to eight firms from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency is seeking insights into how these practices affect privacy, competition, and consumer protection.
Companies utilize data-driven methods, such as AI, in a practice known as “surveillance pricing,” also referred to as “dynamic pricing.” This allows them to display varying prices for the same products based on factors like location, demographics, credit history, and browsing or shopping habits.
Many of the firms contacted by the FTC offer transaction, sales, and pricing solutions to some of the largest businesses in the U.S. and around the world. For instance, Task Software manages transactions for well-known hospitality brands, including McDonald’s and Starbucks. Revionics specializes in retail price optimization software used by global chains such as Home Depot. Pros, known for its AI-driven pricing solutions, serves clients like Nestlé, HP, and United Airlines, and collaborates with Microsoft as a technology partner.
The FTC aims to clarify this “opaque market” that categorizes consumers and establishes targeted pricing for various products and services.
FTC Chair Lina Khan expressed concern, stating, “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 particularly interested in four crucial areas: the types of surveillance pricing products and services offered by each company; their data collection methods; customer and sales information; and the influence of these surveillance practices on the prices consumers pay.