FTC Dives into Dynamic Pricing: What Are Companies Hiding?

by

in

The Federal Trade Commission (FTC) has initiated an investigation involving several major companies regarding their use of customer data, algorithms, and artificial intelligence to customize pricing for individual consumers.

Eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received information requests from the regulatory body on Tuesday. The FTC seeks to understand how these pricing strategies affect privacy, competition, and consumer protection.

These companies utilize data tools, often referred to as “surveillance pricing” or “dynamic pricing,” which allows them to display different prices for the same products based on various consumer characteristics and behaviors, such as location, demographics, credit history, and browsing or shopping history.

Many of the firms targeted by the FTC offer transaction, sales, and pricing services to major corporations in the U.S. and worldwide. Task is known for managing transactions for significant hospitality brands like McDonald’s and Starbucks, while Revionics supplies retail price optimization software to major chains, including Home Depot. Pros, which specializes in AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clients and collaborates with Microsoft on technology development.

The FTC aims to uncover the inner workings of what it describes as an “opaque market” that profiles consumers and establishes targeted pricing strategies.

“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,” stated FTC Chair Lina Khan. “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 focused on gathering information in four main areas: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales data, and how these surveillance practices affect the pricing consumers ultimately pay.

Popular Categories


Search the website