The Federal Trade Commission (FTC) has initiated an investigation into several major corporations regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
The inquiry affects eight companies from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC seeks to understand how these practices impact privacy, competition, and consumer protection.
These companies utilize data tools, notably AI, to implement a method known as “surveillance pricing” or “dynamic pricing.” This approach allows businesses to present different prices for the same products based on individual customer characteristics or behaviors, including factors like location, demographics, credit history, and online activities.
Many of the firms under scrutiny provide transaction, sales, and pricing services to leading corporations both in the U.S. and internationally. Task Software handles transaction management for various significant hospitality brands, like McDonald’s and Starbucks. Revionics specializes in retail price optimization and serves numerous well-known chains such as Home Depot. Pros offers AI-driven pricing solutions and lists Nestlé, HP, and United Airlines among its clientele. Additionally, it collaborates with Microsoft as a technology development partner.
The FTC aims to unveil the workings of this “opaque market,” where shoppers are categorized and targeted with specific pricing for products and services.
“Companies that collect personal data from Americans jeopardize their privacy. Now it appears they may be using extensive consumer data to impose higher prices,” stated FTC Chair Lina Khan. “Consumers have the right to know if businesses are utilizing detailed personal data for surveillance pricing, and this inquiry will illuminate the hidden connections within this pricing ecosystem.”
The FTC is investigating four primary aspects: 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 pricing.