The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their methods of utilizing customer data, algorithms, and artificial intelligence to customize pricing for individual consumers.
The inquiry involves eight companies from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC has issued orders to these firms to provide information about how their pricing practices affect privacy, competition, and consumer protection.
These companies are employing methods referred to as “surveillance pricing” or “dynamic pricing,” whereby different prices may be presented to consumers for the same products based on various factors, including location, demographics, credit history, and online shopping behaviors.
Many of the firms under investigation offer transaction, sales, and pricing services to major businesses in the United States and around the world. Task Software manages transactions for several high-profile hospitality brands, including McDonald’s and Starbucks. Revionics provides retail pricing optimization solutions used by numerous global retail chains, such as Home Depot. Pros, which specializes in AI-driven pricing software, counts Nestlé, HP, and United Airlines among its clients and also collaborates with Microsoft for technology development.
The FTC aims to clarify the intricacies of this “opaque market,” which categorizes consumers and establishes targeted pricing for goods and services.
“Firms that collect Americans’ personal data can compromise individuals’ privacy. We are concerned that these companies may be using this extensive personal information to set higher prices,” stated FTC Chair Lina Khan. “Americans have a right to understand if their personal data is being utilized for surveillance pricing, and this inquiry will provide insight into this obscure network of pricing intermediaries.”
The FTC is seeking information in four main areas: the types of surveillance pricing solutions each firm provides, their data collection methods, details about customer and sales information, and the impact of these practices on customer pricing.