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 set personalized pricing.
On Tuesday, the agency issued requests for information to eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC aims to uncover the implications of these pricing strategies on privacy, competition, and consumer protection.
These companies employ data-driven practices known as “surveillance pricing” or “dynamic pricing,” which allow them to present varying prices for the same products to different consumers based on factors such as location, demographics, credit history, and online behavior.
Many of the firms targeted by the FTC provide essential transaction, sales, and pricing services to major businesses in the United States and around the world. Task Software manages transactions for significant hospitality brands, including McDonald’s and Starbucks. Revionics delivers price optimization tools and analytics to large retailers like Home Depot. Pros, recognized for its AI-driven pricing solutions, serves clients such as Nestlé, HP, and United Airlines and also collaborates with Microsoft on technology development.
The FTC is focused on understanding this “opaque market” that employs data to categorize shoppers and determine targeted pricing strategies.
“Companies that collect personal data from Americans may jeopardize privacy. There is a concern that businesses may exploit this wealth of personal information to impose higher prices,” stated FTC Chair Lina Khan. “Americans should be informed if companies are leveraging detailed consumer data for surveillance pricing, and the FTC’s investigation will illuminate the hidden world of pricing intermediaries.”
The FTC is seeking insights on four main areas: the types of surveillance pricing solutions offered by each company, their data collection methods, customer and sales information, and how these surveillance practices affect the prices that consumers ultimately pay.