The Federal Trade Commission (FTC) has initiated an investigation into several major corporations regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
Eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received inquiries from the FTC on Tuesday. The agency seeks to understand the implications of their pricing practices on consumer privacy, competition, and protection.
These companies utilize data-driven techniques, often referred to as “surveillance pricing” or “dynamic pricing,” which allow them to display varying prices for identical products based on individual consumer traits and behaviors, such as location, demographics, credit history, and online shopping habits.
Many of the firms approached by the FTC play crucial roles in providing transaction, sales, and pricing solutions to some of the largest companies in the United States and around the world. Task Software is notable for managing transactions for major hospitality brands like McDonald’s and Starbucks. Revionics specializes in retail pricing optimization software for global chains, including Home Depot. Pros offers AI-enhanced pricing solutions and counts Nestlé, HP, and United Airlines among its clientele, while also partnering with Microsoft for technology development.
The FTC aims to delve deeper into what it describes as an “opaque market” that categorizes consumers and sets targeted pricing for products and services.
“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,” stated FTC Chair Lina Khan. “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 commission is focusing its investigation on four main areas: the various surveillance pricing products and services offered by each company, data collection practices, customer and sales data, and the impact of these practices on the prices consumers ultimately pay.