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.
The FTC has sent information requests to eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency is examining the implications of these pricing practices on privacy, competition, and consumer protection.
These firms utilize data-driven tools, often referred to as “surveillance pricing” or “dynamic pricing,” which enable them to display varying prices to customers based on specific characteristics or behaviors. Factors influencing these prices can include customers’ locations, demographics, credit histories, and online shopping or browsing activities.
Many of the companies involved in the FTC’s inquiry provide essential transaction, sales, and pricing services to major domestic and international businesses. For instance, Task Software is known for managing transaction processes for well-known hospitality brands like McDonald’s and Starbucks. Revionics offers retail price optimization software and pricing analytics for global chains such as Home Depot. Additionally, Pros, which promotes itself as an AI-driven pricing solutions provider, boasts a clientele that includes Nestlé, HP, and United Airlines, and it collaborates with Microsoft on technology developments.
The FTC aims to clarify what it describes as an “opaque market” that categorizes consumers and implements targeted pricing strategies for goods and services.
“Companies that collect personal data from Americans can jeopardize their privacy. These firms may be leveraging extensive personal information to impose higher prices on consumers,” stated FTC Chair Lina Khan. “Americans have the right to know if businesses are utilizing detailed consumer data to enforce surveillance pricing, and this inquiry will illuminate the concealed network of pricing intermediaries.”
The FTC is seeking details in four main areas: the specific surveillance pricing products and services offered by each company, their data collection methods, customer and sales data, and the effects of these practices on pricing for consumers.