The Federal Trade Commission (FTC) has initiated an investigation into several major corporations regarding their utilization of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
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 understand the implications of these practices on privacy, competition, and consumer protection.
These firms employ data-driven methods, often referred to as “surveillance pricing” or “dynamic pricing,” which allows them to present varying prices to consumers for identical products based on individual traits and behaviors such as geolocation, demographics, credit history, and online activity.
Many of the companies under scrutiny provide transaction, sales, and pricing solutions to some of the largest corporations in the United States and beyond. Task Software is connected with several prominent hospitality brands, including McDonald’s and Starbucks. Revionics specializes in retail price optimization and services major chains like Home Depot, while Pros offers AI-driven pricing solutions and counts clients such as Nestlé, HP, and United Airlines. The company is also a technology development partner with Microsoft.
The FTC aims to clarify the workings of this “opaque market” where consumers are classified and charged targeted prices for goods and services.
FTC Chair Lina Khan emphasized the risks associated with companies collecting personal data. In her statement, she noted, “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 is seeking details in four main areas: the types of surveillance pricing products offered by each company, their data collection methods, customer and sales data, and the effects of these pricing practices on the costs consumers face.