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.
On Tuesday, the FTC issued orders to eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking information on how these pricing methods affect privacy, competition, and consumer protection.
These companies utilize data-driven techniques, often referred to as “surveillance pricing” or “dynamic pricing,” which allow them to offer varying prices for the same products based on individual consumer characteristics and behaviors. Factors taken into account can include location, demographics, credit history, and online shopping habits.
Many of the targeted companies provide pricing and transaction services to some of the largest corporations in the U.S. and across the globe. Notably, Task Software works with major hospitality brands like McDonald’s and Starbucks, while Revionics supplies price optimization and analytics to retail giants, including Home Depot. Pros, known for its AI-driven pricing solutions, serves clients such as Nestlé, HP, and United Airlines, and has a partnership with Microsoft.
The FTC aims to uncover details about this “opaque market” where shoppers are categorized, leading to targeted pricing for various goods and services.
FTC Chair Lina Khan emphasized the risks associated with the harvesting of personal data, stating, “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 focused on four areas: the types of surveillance pricing services offered by each company, their data collection methods, customer and sales information, and the impact of these practices on the pricing customers are charged.