The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to set personalized pricing.
The companies that received inquiries from the FTC include Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency is seeking information to understand the implications of these pricing strategies on privacy, competition, and consumer protection.
Businesses are increasingly utilizing data-driven techniques, known as “surveillance pricing” or “dynamic pricing,” which allow them to offer different prices for the same products based on various consumer traits. These may include factors such as geographical location, demographics, credit history, and shopping behaviors.
Many of the investigated firms supply transaction, sales, and pricing services to some of the largest companies both in the U.S. and internationally. For instance, Task Software handles transactions for major hospitality brands like McDonald’s and Starbucks, while Revionics offers retail pricing solutions to companies including Home Depot. The software company Pros, known for its AI-driven pricing solutions, serves clients such as Nestlé, HP, and United Airlines and collaborates with Microsoft on technology development.
The FTC aims to clarify this “opaque market,” which categorizes consumers and establishes targeted pricing. FTC Chair Lina Khan emphasized the potential threats to privacy, 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 collecting information on four main areas: the products and services related to surveillance pricing offered by each company, data collection methods, customer and sales information, and the impact of these practices on consumer pricing.