The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence (AI) to personalize pricing.
On Tuesday, the agency issued orders to eight firms spanning various industries—Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros—seeking detailed information about the implications of these pricing methods on privacy, competition, and consumer protection.
Companies are leveraging data tools, including AI, for a practice known as “surveillance pricing” or “dynamic pricing,” which enables them to display different prices for the same products based on customer attributes or behavior. Factors influencing these prices may include customers’ locations, demographics, credit histories, and their browsing or shopping activities.
Many of the firms under scrutiny by the FTC offer transaction, sales, and pricing services to significant companies both domestically and internationally. For instance, Task Software manages transactions for major hospitality brands like McDonald’s and Starbucks. Revionics specializes in retail price optimization software and provides pricing analytics for global chains such as Home Depot. Pros, which promotes its AI-driven pricing solutions, serves clients like Nestlé, HP, and United Airlines and collaborates with Microsoft as a technology development partner.
The FTC aims to uncover the complexities of this “opaque market,” which segments shoppers and assigns targeted prices for goods and services.
FTC Chair Lina Khan highlighted the potential privacy risks associated with companies collecting personal data, expressing concern that this information might be misused to impose higher prices on consumers. Khan 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 FTC is focusing on four primary areas: the different types of surveillance pricing products and services offered, the methods of data collection, customer and sales data, and the effect of these surveillance practices on the final prices that customers pay.