The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies concerning their practices involving customer data, algorithms, and artificial intelligence in personalized pricing strategies.
The investigation focuses on eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. These companies were issued orders on Tuesday by the FTC, seeking insights on how their pricing practices affect privacy, competition, and consumer protection.
These businesses utilize tools like artificial intelligence for what is known as “surveillance pricing,” or “dynamic pricing.” This method allows them to present varying prices for the same products to different consumers based on factors such as location, demographics, credit history, and online shopping behavior.
Several of the firms targeted by the FTC provide transaction and pricing services to major U.S. and international corporations. For instance, Task Software supports several large hospitality brands, including McDonald’s and Starbucks, while Revionics delivers pricing optimization software to retailers like Home Depot. Pros, which offers AI-based pricing solutions, serves clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC aims to investigate the “opaque market” that enables the categorization of shoppers and the setting of targeted prices for various 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 FTC is specifically seeking information on four main aspects: the types of surveillance pricing products and services provided by each company, their data collection methods, customer and sales data, and the impact of these surveillance practices on the prices customers pay.