The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their methods of utilizing customer data, algorithms, and artificial intelligence for customized pricing strategies.
The FTC has issued orders to eight companies: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking insight into how these pricing practices affect privacy, competition, and consumer protection.
These companies are implementing a method known as “surveillance pricing” or “dynamic pricing,” which allows them to present varying prices to different consumers based on personal factors such as location, demographics, credit score, and shopping habits.
Many of the firms approached by the FTC are integral to the transaction, sales, and pricing services for numerous prominent businesses both in the U.S. and worldwide. For example, Task Software manages transactions for substantial hospitality chains, including McDonald’s and Starbucks. Revionics offers retail price optimization solutions for numerous global retailers, such as Home Depot. Pros, which provides AI-driven pricing tools, has notable clients including Nestlé, HP, and United Airlines, and partners with Microsoft in technology development.
The FTC aims to clarify the “opaque market” that categorizes consumers and applies targeted pricing for goods 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 commission is focusing its inquiry on four main aspects: the different types of surveillance pricing products and services offered by each company; data collection methods; customer and sales data; and the effects of these surveillance practices on consumer pricing.