The Federal Trade Commission (FTC) has initiated an investigation into several major corporations regarding their use of customer data, algorithms, and artificial intelligence to implement personalized pricing strategies.
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The FTC has issued orders to eight companies from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency is seeking information on how these pricing practices affect privacy, competition, and consumer protection.
These companies utilize data-driven tools, such as artificial intelligence, to engage in what is known as “surveillance pricing” or “dynamic pricing.” This method allows them to display different prices for identical products based on individual consumer traits and behaviors, such as location, demographics, credit history, and previous shopping patterns.
Many of the firms being investigated are significant players in transaction, sales, and pricing services both in the U.S. and internationally. Task Software manages transactions for major hospitality brands like McDonald’s and Starbucks, while Revionics specializes in retail price optimization for brands such as Home Depot. Pros provides AI-driven pricing solutions and works with clients like Nestlé, HP, and United Airlines, and is a tech development partner of Microsoft.
The FTC aims to clarify this “opaque market” that categorizes consumers and establishes targeted pricing for goods and services. FTC Chair Lina Khan emphasized the risks posed to consumer privacy from companies collecting personal data, suggesting that it may be exploited for higher pricing. She stated, “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 investigation will focus on four major areas: the types of surveillance pricing services offered by each company, their data collection methods, customer and sales information, and the effects of these practices on the prices consumers ultimately pay.