The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
Eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have been ordered by the FTC to provide information concerning how these pricing practices affect privacy, competition, and consumer protection.
These companies utilize what is known as “surveillance pricing” or “dynamic pricing,” which involves showing different prices to consumers based on their individual characteristics or behaviors. This can encompass factors such as location, demographics, credit history, and online shopping habits.
Many of the firms under scrutiny supply transaction, sales, and pricing services to some of the largest corporations in the U.S. and worldwide. Task Software manages transactions for major hospitality chains, including McDonald’s and Starbucks. Revionics offers retail price optimization software and analytics to numerous global retailers like Home Depot. Pros develops AI-driven pricing solutions and serves clients such as Nestlé, HP, and United Airlines, and partners with Microsoft for technology development.
The FTC aims to investigate this “opaque market” that categorizes consumers for targeted pricing of products 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 agency is seeking information on four main areas: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales information, and how these surveillance practices impact the prices that consumers ultimately pay.