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, have been ordered by the FTC to provide information on how these pricing practices affect privacy, competition, and consumer protection.
Companies utilize data-driven tools, including AI, to implement a practice known as “surveillance pricing” or “dynamic pricing,” where different prices are presented to consumers for the same product based on various factors such as location, demographics, credit history, and shopping behavior.
Many firms engaged in this inquiry offer transaction, sales, and pricing services to some of the largest corporations in the U.S. and around the world. For instance, Task Software is linked to key hospitality brands like McDonald’s and Starbucks, while Revionics specializes in retail price optimization for major chains, including Home Depot. Pros, which focuses on AI solutions for pricing, serves clients such as Nestlé, HP, and United Airlines and collaborates with Microsoft for technology development.
The FTC aims to clarify the complexities of an “opaque market” that profiles consumers and sets targeted pricing for various products and services.
FTC Chair Lina Khan stated, “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 FTC’s investigation will focus on four main areas: the types of surveillance pricing products and services offered by each company, the methods of data collection, customer and sales information, and the influence of these surveillance practices on consumer prices.