The Federal Trade Commission (FTC) has initiated an investigation into several large companies regarding their use of customer data, algorithms, and artificial intelligence in personalized pricing strategies.
The FTC delivered information requests to eight companies—Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros—on Tuesday, seeking insights into how these pricing methods impact consumer privacy, competition, and consumer protections.
These companies utilize data analytics and AI to implement what is known as “surveillance pricing” or “dynamic pricing,” which allows them to display varying prices to different consumers for the same products based on individual characteristics, such as location, demographics, credit history, and online behavior.
Many of the firms under scrutiny provide transaction and pricing services for major corporations both in the U.S. and internationally. Task Software is known for its role in transaction management for hospitality giants like McDonald’s and Starbucks, while Revionics offers retail pricing optimization tools to numerous global retailers, including Home Depot. Pros, which specializes in AI-driven pricing solutions, has clients such as Nestlé, HP, and United Airlines and collaborates with Microsoft on technology development.
The FTC aims to clarify the complexities of this “opaque market” that segments consumers and sets specific prices for products and services. In a statement, FTC Chair Lina Khan expressed concern about the potential misuse of personal data, stating, “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 agency is focusing on four main aspects: the surveillance pricing products and services offered by each company, their data collection methods, customer and sales information, and the influence of these practices on the final prices consumers pay.