The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence in setting individualized prices.
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The FTC has issued requests for information to eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency is examining how the practice of personalized pricing affects privacy, competition, and consumer protection.
Companies are utilizing data tools to implement a method known as “surveillance pricing” or “dynamic pricing,” which allows them to display varying prices for the same products based on specific consumer characteristics or behaviors, such as location, demographics, credit history, and shopping habits.
Many of the companies under scrutiny provide transaction, sales, and pricing services to some of the largest businesses in the U.S. and worldwide. Task Software manages transactions for major hospitality brands like McDonald’s and Starbucks, while Revionics offers retail price optimization solutions to well-known retailers such as Home Depot. Pros, a company specializing in AI-driven pricing solutions, serves clients like Nestlé, HP, and United Airlines and collaborates with Microsoft on technology development.
The FTC aims to investigate the “opaque market” that profiles consumers and establishes targeted pricing for 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 agency is seeking information on four main aspects: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales data, and the impact of these surveillance practices on customer pricing.