The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to implement 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 on how these pricing practices affect privacy, competition, and consumer protection.
These companies utilize data tools, such as artificial intelligence, in a practice known as “surveillance pricing” or “dynamic pricing,” which allows them to display varying prices for the same products based on consumer characteristics or behaviors. Factors may include location, demographics, credit history, and past shopping habits.
Many of the firms under scrutiny offer 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, while Revionics delivers pricing optimization software to companies like Home Depot. Pros, which claims to provide AI-driven pricing solutions, serves clients like Nestlé, HP, and United Airlines and collaborates with Microsoft on technology development.
The FTC aims to clarify this “opaque market” that categorizes consumers and sets targeted prices for goods and services.
“Companies that collect personal data from Americans can jeopardize privacy. They may also exploit this significant amount of personal information to impose higher prices,” stated FTC Chair Lina Khan. “Americans have the right to understand whether businesses are using detailed consumer data to implement surveillance pricing, and the FTC’s investigation will illuminate this obscure realm of pricing intermediaries.”
The FTC is seeking information in four main areas: the specific types of surveillance pricing products and services offered by each company, data collection methods, customer and sales data, and the influence of these practices on the prices customers pay.