The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to personalize pricing strategies.
The inquiry involves eight firms across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The regulatory agency issued orders seeking detailed information on how these pricing practices affect privacy, competition, and consumer protection.
These companies employ a method referred to as “surveillance pricing” or “dynamic pricing.” This practice allows businesses to present different price points for identical products based on specific consumer characteristics such as location, demographics, credit history, and online behavior.
Many firms targeted by the FTC are significant players in transaction, sales, and pricing services, catering to major firms both in the U.S. and internationally. Task Software manages transactions for notable hospitality brands, including McDonald’s and Starbucks. Revionics specializes in retail price optimization software and analytics for large retail chains like Home Depot, while Pros, known for its AI-driven pricing solutions, serves clients such as Nestlé, HP, and United Airlines. Pros is also a technology partner with Microsoft.
The FTC aims to clarify the dynamics of this “opaque market” that utilizes consumer data to set personalized prices for goods and services. FTC Chair Lina Khan expressed concerns over companies potentially exploiting extensive personal data to charge consumers higher prices. She emphasized the need for transparency regarding whether businesses are using in-depth consumer information for surveillance pricing, stating that the inquiry aims to illuminate this unclear pricing landscape.
The FTC is gathering information on four critical aspects: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales data, and how these surveillance practices affect the final prices consumers face.