The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing.
The inquiry affects eight companies across various industries, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC issued orders for information on how these pricing practices impact privacy, competition, and consumer protection.
Companies utilize tools like AI to implement what is known as “surveillance pricing” or “dynamic pricing,” offering different prices for the same products based on individual consumer characteristics or behaviors. Factors influencing these prices can include location, demographics, credit history, and online activity.
Among the firms being scrutinized, some provide transaction, sales, and pricing services to major companies both in the U.S. and internationally. Task Software manages transactions for well-known hospitality brands such as McDonald’s and Starbucks. Revionics specializes in retail price optimization software for numerous global retailers, including Home Depot. Pros offers AI-based pricing solutions and has clients like Nestlé, HP, and United Airlines, and also collaborates with Microsoft on technology development.
The FTC aims to investigate the “opaque market” that involves categorizing shoppers for targeted pricing. FTC Chair Lina Khan emphasized the risks posed to consumer privacy by businesses that collect personal data, expressing concern that this information could enable companies to impose higher prices on consumers. Khan stated that Americans should be informed about how their data is used to set prices, and the agency’s inquiry seeks to clarify this complex pricing landscape.
The FTC’s investigation focuses on four main areas: the types of surveillance pricing products and services offered by each company, data collection methods, customer and sales information, and the impact of these pricing practices on consumer prices.