The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their methods for utilizing customer data, algorithms, and artificial intelligence to customize pricing for individual consumers.
On Tuesday, the agency issued information requests to eight companies across various sectors: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The investigation aims to examine how these pricing strategies affect privacy, competition, and consumer protection.
These firms employ techniques known as “surveillance pricing” or “dynamic pricing,” where different prices for the same products are displayed to consumers based on their characteristics or behavior, including factors such as location, demographics, credit history, and online shopping habits.
Many of the companies under scrutiny provide vital sales transaction and pricing services to some of the largest businesses both in the U.S. and globally. Task Software manages transactions for major hospitality brands like McDonald’s and Starbucks, while Revionics offers pricing analytics and retail price optimization software to chains such as Home Depot. Pros, which claims to deliver AI-driven pricing solutions, serves clients including Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC seeks to uncover insights into the “opaque market” that segments consumers and establishes targeted pricing.
“With companies collecting extensive data on American consumers, there’s a risk to privacy, and there’s potential exploitation of this data to impose higher prices,” stated FTC Chair Lina Khan. “It’s essential for Americans to understand whether businesses are using detailed consumer information to engage in surveillance pricing. This investigation will illuminate the hidden dynamics of pricing intermediaries.”
The FTC is focusing on four main areas: the types of surveillance pricing products and services each company offers, data collection methods, customer and sales information, and how these practices affect the prices consumers ultimately pay.