The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their utilization of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
Among the eight companies targeted by the FTC are Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency issued orders on Tuesday demanding information about how these practices affect privacy, competition, and consumer protection.
These companies employ methods known as “surveillance pricing” or “dynamic pricing,” which involve presenting different prices to consumers for identical products based on various factors such as location, demographics, credit history, and browsing or shopping habits.
Many of the firms under scrutiny play a significant role in facilitating transaction, sales, and pricing services for major corporations in the United States and internationally. For instance, Task Software supports numerous hospitality giants, including McDonald’s and Starbucks, while Revionics offers retail price optimization solutions to global chains like Home Depot. Additionally, Pros, which provides AI-driven pricing solutions, serves clients such as Nestlé, HP, and United Airlines and collaborates with Microsoft as a technology development partner.
The FTC aims to investigate the “opaque market” surrounding targeted pricing strategies that categorize consumers and adjust prices accordingly.
FTC Chair Lina Khan emphasized the importance of transparency, 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 FTC’s request focuses 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 how these surveillance strategies affect the prices consumers ultimately pay.