The Federal Trade Commission (FTC) has initiated an investigation into several leading companies regarding their practices related to customer data, algorithms, and artificial intelligence for personalized pricing strategies.
The investigation targets eight companies: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. On Tuesday, these firms received requests for information on how their pricing methods affect privacy, competition, and consumer protection.
These companies utilize data-driven approaches, often referred to as “surveillance pricing” or “dynamic pricing,” which allow them to present different prices for identical products to consumers based on various factors such as location, demographics, credit history, and browsing habits.
Many of the firms under scrutiny provide transaction, sales, and pricing services to some of the most prominent corporations in the United States and worldwide. For instance, Task Software handles transaction management for major hospitality brands like McDonald’s and Starbucks, while Revionics offers retail pricing solutions to global chains including Home Depot. Pros, which specializes in AI-driven pricing solutions, serves well-known brands like Nestlé, HP, and United Airlines and collaborates with Microsoft on technology development.
The FTC aims to uncover the complexities of this “opaque market,” which categorizes consumers and sets targeted prices based on their data.
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 particularly interested in four areas: the types of surveillance pricing products and services offered by each company, their methods of data collection, information on customers and sales, and how these practices affect the pricing consumers ultimately pay.