The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their practices of utilizing customer data, algorithms, and artificial intelligence to customize pricing for individual consumers.
Eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received requests from the FTC on Tuesday for information about the implications of these pricing methods on privacy, competition, and consumer protection.
These companies are accused of employing a strategy known as “surveillance pricing” or “dynamic pricing,” where they adjust prices for the same products for different consumers based on various factors such as location, demographics, credit history, and online behavior.
Many of the firms that responded to the FTC provide significant transaction, sales, and pricing services to major corporations both in the U.S. and internationally. Task Software is known for managing transactions for several leading hospitality brands, including McDonald’s and Starbucks. Revionics specializes in retail price optimization and analytics and serves several large chains, such as Home Depot. Pros offers AI-driven pricing solutions and has a client roster that includes Nestlé, HP, and United Airlines, and partners with Microsoft for technology development.
The FTC aims to clarify the “opaque market” that profiles shoppers and assigns targeted prices based on their data.
FTC Chair Lina Khan stated, “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 investigation will focus on four main areas: the types of surveillance pricing products and services offered by each company, data collection methods, customer and sales data, and the impact of these surveillance policies on customer pricing.