The Federal Trade Commission (FTC) has initiated an investigation into several large companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
On Tuesday, the FTC issued information requests to eight firms: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency aims to gather insights on how these practices impact privacy, competition, and consumer protection.
Companies utilize advanced data tools, including AI, to implement what is termed “surveillance pricing” or “dynamic pricing.” This method allows businesses to display varying prices for identical products based on individual consumer traits like location, demographics, credit history, and past shopping behavior.
Many of the entities approached by the FTC are providers of transaction, sales, and pricing services to major U.S. and international companies. Task Software manages transactions for prominent hospitality brands such as McDonald’s and Starbucks, while Revionics offers pricing optimization tools for retailers, including Home Depot. Pros, known for its AI-driven pricing solutions, serves clients like Nestlé, HP, and United Airlines, and collaborates with Microsoft.
The FTC is probing this “opaque market,” which categorizes consumers and adjusts prices based on their profiles.
FTC Chair Lina Khan emphasized the risks associated with personal data exploitation, stating, “Firms that harvest Americans’ personal data can put people’s privacy at risk. Now firms could be exploiting this vast trove of personal information to charge people higher prices. 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 FTC’s investigation will focus on four main areas: the types of surveillance pricing products and services offered by each company, data collection methods, customer and sales information, and the effects of these practices on customer pricing.