The Federal Trade Commission (FTC) has initiated an investigation involving several prominent companies to examine their practices regarding customer data, algorithms, and artificial intelligence for personalized pricing strategies.
The FTC issued orders to eight firms, which include Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking details about how these pricing tactics affect privacy, competition, and consumer protection.
These companies utilize data-driven tools, known as “surveillance pricing” or “dynamic pricing,” to present different prices to consumers for identical products based on various characteristics such as location, demographics, credit history, and browsing or shopping history.
Many of the firms contacted by the FTC provide transaction, sales, and pricing services to some of the largest businesses both in the United States and internationally. Task Software manages transactions for major hospitality companies, including McDonald’s and Starbucks. Revionics specializes in retail price optimization software and analytics for global retailers like Home Depot. Pros, a company offering AI-driven pricing solutions, serves clients including Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC aims to understand the complexities of this “opaque market,” which categorizes consumers and assigns targeted prices for various products and services.
The FTC Chair, Lina Khan, stated, “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 inquiry will focus on four main areas: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales information, and the impact of these practices on the prices consumers ultimately pay.