The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their practices surrounding customer data utilization, algorithms, and artificial intelligence in relation to personalized pricing strategies.
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The FTC issued requests to eight companies spanning various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, on Tuesday. The agency is examining the implications of personalized pricing on consumer privacy, competition, and protection.
Through advanced data tools, many companies engage in “surveillance pricing,” also referred to as “dynamic pricing,” which allows them to present different prices for identical products based on customer attributes or behaviors. Factors influencing this pricing may include location, demographics, credit history, and browsing or shopping histories.
The firms approached by the FTC are significant players in the transaction and pricing landscapes for some of the largest U.S. and global companies. Task Software manages transactions for major hospitality chains, such as McDonald’s and Starbucks, while Revionics provides pricing optimization software and analytics to retailers like Home Depot. Pros, which specializes in AI-driven pricing solutions, serves clients including Nestlé, HP, and United Airlines, and partners with Microsoft on technology development.
The FTC aims to investigate this “opaque market” known for categorizing consumers and implementing targeted pricing strategies.
“Companies that collect personal data from Americans risk compromising their privacy. Now, these companies might exploit this extensive data to implement higher prices,” stated FTC Chair Lina Khan. “Americans should be aware of whether businesses are leveraging detailed consumer data for surveillance pricing, and the FTC’s investigation will illuminate this obscure network of pricing intermediaries.”
The FTC is seeking to gather information on four main topics: the types of surveillance pricing products and services the companies offer, their data collection methods, customer and sales data, and how these surveillance practices affect the prices consumers ultimately pay.