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.
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The FTC issued information requests to eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking insights into how these pricing methods affect privacy, competition, and consumer protection.
These companies use data-driven tools, often referred to as “surveillance pricing” or “dynamic pricing,” allowing them to present different prices for the same products to various consumers based on their personal traits or behavior. Factors influencing these price variations may include geographical location, demographic information, credit history, and browsing or shopping activities.
Several of the companies under scrutiny offer transaction, sales, and pricing services to major corporations across the U.S. and around the world. Task Software manages transactions for significant hospitality brands such as McDonald’s and Starbucks. Revionics specializes in retail price optimization software and provides pricing analytics for major retailers, including Home Depot. Pros, a company known for its AI-driven pricing solutions, claims notable clients like Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC aims to investigate the complexities of this “opaque market,” which sorts consumers and establishes targeted pricing for various products and services.
“Companies that collect personal data from Americans may jeopardize individuals’ privacy. There is a risk that these companies could use this wealth of personal data to impose higher prices,” stated FTC Chair Lina Khan. “Americans have a right to understand if businesses are utilizing intricate consumer information to implement surveillance pricing, and this inquiry will illuminate the obscure world of pricing intermediaries.”
The FTC is particularly interested in four main areas: the specific surveillance pricing products and services offered by each company, the methods of data collection, customer and sales information, and the impact of these surveillance practices on the prices that customers ultimately pay.