The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence in setting personalized prices. On Tuesday, the agency issued orders to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking information on the effects of these pricing strategies on privacy, competition, and consumer protection.
These companies utilize data-driven strategies, referred to as “surveillance pricing” or “dynamic pricing,” which display varied prices for the same products based on consumer characteristics or behaviors such as location, demographics, credit history, and online shopping habits.
Many of the firms under investigation provide transactional services, sales, and pricing solutions to some of the largest companies both in the U.S. and internationally. Task Software, for example, manages transactions for major hospitality brands like McDonald’s and Starbucks, while Revionics offers retail pricing optimization tools to several global retailers, including Home Depot. Pros, which markets itself as a provider of AI-driven pricing solutions, has notable clients such as Nestlé, HP, and United Airlines, and is also a development partner of Microsoft.
The FTC aims to uncover the practices within this “opaque market” that profiles consumers and assigns targeted prices for goods and services. FTC Chair Lina Khan stated, “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 commission is seeking information in four main areas: the types of surveillance pricing solutions offered by each company, their data collection methods, relevant customer and sales data, and how these surveillance practices affect the pricing consumers ultimately encounter.