The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their practices related to customer data, algorithms, and artificial intelligence in connection with individualized pricing strategies.
Eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have been issued information requests by the FTC, focusing on the implications of these pricing methods on consumer privacy, market competition, and consumer protection.
These companies utilize advanced data tools, such as artificial intelligence, to implement a pricing strategy referred to as “surveillance pricing” or “dynamic pricing,” which allows them to present varying prices for identical products based on individual consumer attributes. Factors influencing pricing can include location, demographic details, credit history, and past browsing or shopping behaviors.
Many of the firms under scrutiny play significant roles in providing transaction, sales, and pricing services to major corporations both in the United States and internationally. Task Software, for instance, manages transactions for notable hospitality brands like McDonald’s and Starbucks, while Revionics specializes in retail price optimization, catering to global chains such as Home Depot. Pros, which markets itself as a provider of AI-driven pricing solutions, serves high-profile clients like Nestlé, HP, and United Airlines and collaborates with Microsoft in technology development.
The FTC aims to investigate this “opaque market” that classifies consumers and establishes targeted pricing structures for various goods and services.
FTC Chair Lina Khan emphasized the risks associated with companies collecting personal data, stating, “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 seeking information in four primary areas: the types of surveillance pricing services offered by each company, their data collection methods, customer and sales data, and the impact of these practices on consumer pricing.