The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence to customize pricing for individual consumers.
This move comes as McDonald’s faces its first lawsuit connected to an E. coli outbreak linked to its Quarter Pounder burger.
Eight companies across various sectors — including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros — received requests from the FTC for details concerning the implications of their pricing strategies on privacy, competition, and consumer protection.
These firms are utilizing data tools to implement a practice referred to as “surveillance pricing” or “dynamic pricing,” which involves offering different prices to consumers based on factors such as location, demographics, credit history, and shopping habits.
Many of the companies approached by the FTC supply transaction, sales, and pricing services to some of the largest enterprises in the U.S. and around the globe. Task Software is a transaction management firm that supports a number of major hospitality brands, including McDonald’s and Starbucks. Revionics specializes in retail price optimization software and pricing analytics for global chains like Home Depot. Pros, known for its AI-driven pricing solutions, serves clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft for technology development.
The FTC aims to unravel the complexities of this “opaque market” that categorizes shoppers and assigns targeted prices to products and services.
“Companies that collect personal data from Americans may jeopardize their privacy. These firms might be taking advantage of this extensive personal information to impose higher prices,” stated FTC Chair Lina Khan. “Americans have the right to understand whether businesses are using detailed consumer data for surveillance pricing. The FTC’s inquiry will illuminate this obscure pricing system that involves various intermediaries.”
The FTC is seeking information in four primary areas: the types of surveillance pricing products and services offered by each company; data collection methods; customer and sales information; and the influence of these surveillance practices on the prices that consumers are eventually charged.