The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their methods of utilizing customer data, algorithms, and artificial intelligence for personalized pricing strategies.
On Tuesday, the FTC issued information requests to eight firms across various sectors: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The inquiries aim to explore the implications of these pricing practices for privacy, competition, and consumer protection.
Companies are increasingly using data technology, including AI, to implement a pricing strategy known as “surveillance pricing” or “dynamic pricing,” which allows them to present varying prices for identical products based on individual consumer profiles. Factors influencing these personalized prices may include a shopper’s location, demographics, credit history, and online behavior.
Many of the investigated companies provide pricing and transaction services for major corporations both in the U.S. and internationally. Task Software oversees transaction management for notable hospitality brands like McDonald’s and Starbucks. Revionics delivers retail price optimization and pricing analytics to global retailers, including Home Depot. Pros, known for its AI-driven pricing solutions, serves clients like Nestlé, HP, and United Airlines, and collaborates with Microsoft in technology development.
The FTC aims to clarify this “opaque market” that categorizes consumers and applies targeted pricing strategies. FTC Chair Lina Khan highlighted the potential risks posed by firms that leverage Americans’ personal data. She 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 agency is seeking information in four primary areas: the surveillance pricing products and services each company provides, their data collection practices, customer and sales data, and how these surveillance pricing methods affect the prices consumers ultimately pay.