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.
Eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, were issued orders by the FTC on Tuesday. The agency seeks to understand how these pricing practices affect privacy, competition, and consumer protection.
Many businesses utilize data tools, particularly AI, to implement “surveillance pricing” or “dynamic pricing,” which allows them to present varying prices for the same products based on consumer characteristics or behaviors. Factors influencing these price variations include location, demographics, credit history, and online browsing or shopping history.
The firms targeted by the FTC play significant roles in transaction, sales, and pricing services, catering to major U.S. and global companies. For instance, Task Software manages transactions for several well-known hospitality brands like McDonald’s and Starbucks. Revionics specializes in retail price optimization and provides pricing analytics to companies such as Home Depot. Pros offers AI-driven pricing solutions and counts Nestlé, HP, and United Airlines among its clients, and has a technology partnership with Microsoft.
The FTC aims to uncover the workings of this “opaque market” that involves categorizing consumers and assigning tailored prices for products and services.
According to FTC Chair Lina Khan, “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 focusing on four primary areas: the types of surveillance pricing products and services offered by each company, data collection methods, customer and sales information, and the influence of these surveillance practices on the prices customers ultimately pay.