The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their usage of customer data, algorithms, and artificial intelligence to set individualized pricing.
On Tuesday, the regulatory agency issued orders to eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking details about how these pricing strategies impact privacy, competition, and consumer protection.
Companies utilize data tools and techniques referred to as “surveillance pricing,” or sometimes “dynamic pricing,” to display varying prices for the same products based on factors such as customer location, demographics, credit history, and online shopping behavior.
Many of the firms targeted by the FTC provide transactional and pricing services to some of the largest businesses both in the United States and internationally. Task Software is known for managing transactions for major hospitality chains like McDonald’s and Starbucks. Revionics offers pricing optimization software to retailers, including Home Depot, while Pros provides AI-driven pricing solutions to clients like Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC aims to clarify the “opaque market” characterized by the categorization of shoppers and the targeted pricing of products and services.
“Companies that collect Americans’ personal data can jeopardize their privacy. Now, these firms might be using this extensive personal data to charge higher prices,” stated FTC Chair Lina Khan. “Americans have the right to know if businesses are using detailed consumer information for surveillance pricing, and the FTC’s investigation intends to illuminate this obscure pricing ecosystem.”
The FTC is seeking information in four main areas: the types of surveillance pricing products and services offered, data collection methods, customer and sales data, and the influence of these practices on the prices customers pay.