The Federal Trade Commission (FTC) has initiated an investigation into several major corporations regarding their use of customer data, algorithms, and artificial intelligence to customize pricing strategies.
On Tuesday, the FTC issued information requests to eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency aims to understand how these pricing practices affect privacy, competition, and consumer protections.
These companies utilize data-driven techniques, referred to as “surveillance pricing” or “dynamic pricing,” which allow them to present different prices to consumers for identical products based on individual characteristics such as location, demographics, credit history, and shopping habits.
The firms approached by the FTC are key players in the transaction, sales, and pricing sectors for many leading businesses in the United States and around the globe. Task, for instance, manages transactions for several major hospitality brands, including McDonald’s and Starbucks. Revionics specializes in retail price optimization software, serving customers like Home Depot. Pros, known for its AI-powered pricing solutions, caters to clients such as Nestlé, HP, and United Airlines, and partners with Microsoft in technology development.
The FTC’s inquiry is focused on revealing the complexities of an “opaque market” that enables businesses to categorize consumers and implement targeted pricing strategies.
FTC Chair Lina Khan emphasized the potential risks to consumer privacy, stating, “Companies that collect Americans’ personal data can jeopardize individuals’ privacy. These firms may exploit the vast amounts of personal information to charge higher prices. Americans deserve transparency regarding how businesses utilize detailed consumer data for surveillance pricing, and the FTC’s investigation will offer insights into this hidden pricing ecosystem.”
The agency seeks detailed information on four primary aspects: the surveillance pricing products and services offered by each company, data collection methods, customer and sales data, and the impact of these surveillance practices on the prices consumers ultimately pay.