The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their methods of using customer data, algorithms, and artificial intelligence for personalized pricing strategies.
On Tuesday, the regulatory body issued requests for information to eight firms: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC is examining how these practices affect privacy, competition, and consumer protection.
These businesses utilize data-driven tools, such as artificial intelligence, to engage in what is known as “surveillance pricing” or “dynamic pricing.” This involves presenting different prices for the same products based on factors like location, demographics, credit history, and shopping behavior.
Many of the contacted firms offer transaction, sales, and pricing solutions to some of the largest companies in the U.S. and worldwide. Task Software, for example, manages transactions for major hospitality brands, including McDonald’s and Starbucks. Revionics delivers retail price optimization software to global retail chains like Home Depot. Pros, which specializes in AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clientele and has a partnership with Microsoft for technology development.
The FTC aims to investigate this “opaque market” that profiles consumers and establishes targeted pricing for products and services.
“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 inquiry focuses on four main areas: the types of surveillance pricing products and services offered by each company, the methods of data collection, customer and sales information, and how these practices impact the prices consumers pay.