The Federal Trade Commission (FTC) has initiated an investigation into several major corporations regarding their use of customer data, algorithms, and artificial intelligence to create individualized pricing strategies.
On Tuesday, the FTC issued orders to eight companies across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency is seeking information on how these pricing practices affect privacy, competition, and consumer protection.
Companies utilize data tools, such as AI, to implement “surveillance pricing” or “dynamic pricing,” which allows them to offer different prices to consumers for identical products based on individual characteristics or behaviors. Factors influencing these pricing variations can include customers’ location, demographics, credit history, and online activity.
Many firms under scrutiny provide transaction, sales, and pricing services to prominent businesses both in the U.S. and internationally. Notably, Task is the transaction management provider for major hospitality brands, including McDonald’s and Starbucks. Revionics specializes in retail price optimization and analytics for global chains like Home Depot. Pros, known for its AI-driven pricing solutions, serves 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,” which classifies consumers and sets targeted prices for products and services.
FTC Chair Lina Khan emphasized the risks posed by companies collecting vast amounts 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 specifically looking for information on four main areas: the surveillance pricing products and services offered by each company; their data collection methods; customer and sales data; and how these practices affect the prices customers pay.