The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
The regulatory body has issued requests for information to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. This inquiry is aimed at understanding the effects of such pricing practices on privacy, competition, and consumer protection.
Many of these companies engage in what is termed “surveillance pricing” or “dynamic pricing,” where different prices are presented to consumers for identical products based on various factors such as location, demographics, credit history, and online activity.
Several of the firms targeted by the FTC provide pricing and transaction services to major businesses both domestically and internationally. Task Software, for instance, manages transactions for well-known hospitality brands like McDonald’s and Starbucks, while Revionics offers retail pricing solutions for global retailers including Home Depot. Pros, which provides AI-driven pricing tools, counts major companies like Nestlé, HP, and United Airlines among its clientele, and partners with Microsoft for technology development.
The FTC’s investigation aims to clarify what it sees as a “opaque market” that classifies consumers and implements tailored pricing for goods and services. FTC Chair Lina Khan expressed concern that companies exploiting consumers’ personal data could lead to higher prices for individuals. She emphasized the need for transparency about how businesses utilize extensive consumer information for surveillance pricing strategies, stating that the inquiry would illuminate the hidden layers of pricing practices.
Specifically, the FTC is seeking insights into four main areas: the types of surveillance pricing products and services provided by each company; their data collection methods; customer and sales data; and how these pricing strategies impact the costs paid by consumers.