The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
Eight companies across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received inquiries from the FTC seeking information about how these pricing practices affect privacy, competition, and consumer protection.
These companies utilize data-driven methods, known as “surveillance pricing” or “dynamic pricing,” to offer different prices for the same products based on individual consumer characteristics or behaviors, such as location, demographics, credit history, and online browsing or shopping activity.
Many of the firms contacted by the FTC play a significant role in providing transaction, sales, and pricing services to some of the largest businesses in the United States and worldwide. Task is responsible for transaction management for prominent hospitality brands, including McDonald’s and Starbucks. Revionics specializes in retail price optimization software and analytics for major retailers like Home Depot. Pros, which promotes its AI-driven pricing solutions, serves clients such as Nestlé, HP, and United Airlines, and is also a technology partner of Microsoft.
The FTC aims to clarify the complexities of this “opaque market,” where consumer categorization leads to tailored pricing for goods and services.
“Companies that collect personal data from Americans can jeopardize their privacy. We are concerned that these firms may be capitalizing on massive amounts of personal information to impose higher prices,” stated FTC Chair Lina Khan. “Consumers need to be informed about whether businesses are leveraging detailed data to implement surveillance pricing, and this inquiry will illuminate the intricate system of pricing intermediaries.”
The FTC’s investigation will focus on four main aspects: the types of surveillance pricing products and services offered by the companies, their data collection methods, relevant customer and sales data, and the impact of these practices on the prices customers ultimately pay.