The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to customize pricing strategies.
Eight companies—Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros—were ordered by the FTC to provide information regarding the effects of these pricing practices on privacy, competition, and consumer protection.
Utilizing tools such as AI, businesses implement a method referred to as “surveillance pricing” or “dynamic pricing,” which allows them to present different prices to consumers for identical products based on individual characteristics or behaviors. These factors may include a consumer’s location, demographics, credit history, as well as their browsing or shopping patterns.
Many of the firms under scrutiny by the FTC are integral to transaction, sales, and pricing services for major corporations both in the U.S. and around the world. For instance, Task Software supports transaction management for large hospitality brands such as McDonald’s and Starbucks, while Revionics offers retail price optimization software to global chains like Home Depot. Pros, which promotes itself as an AI-driven pricing solution provider, has clients that include Nestlé, HP, and United Airlines, and it also partners with Microsoft for technology development.
The FTC aims to clarify the complexities of an “opaque market” that categorizes consumers and sets specific prices for products and services based on data.
“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,” stated FTC Chair Lina Khan. “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’s investigation will focus on four primary areas: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales information, and the impact of these practices on the prices consumers ultimately pay.