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.
The agency sent inquiries to eight companies—Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros—requesting details on how these pricing practices affect privacy, competition, and consumer protection.
Businesses utilize data tools, including AI, in a practice known as “surveillance pricing” or “dynamic pricing,” which enables them to display different prices for the same products based on various consumer characteristics and behaviors. Factors such as location, demographics, credit history, and online shopping history can influence these tailored prices.
The companies being investigated provide transaction, sales, and pricing services to many major U.S. and international firms. Task Software manages transactions for several well-known hospitality brands, including McDonald’s and Starbucks, while Revionics offers retail price optimization and pricing analytics for global chains like Home Depot. Pros, a provider of AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clientele, and collaborates with Microsoft on technology development.
The FTC aims to uncover the intricacies of this “opaque market” that categorizes consumers and determines targeted pricing for various products and services.
FTC Chair Lina Khan expressed concern, 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 commission is seeking insights in four main areas: the types of surveillance pricing products and services offered, methods of data collection, customer and sales data, and the influence of these practices on consumers’ final prices.