The Federal Trade Commission (FTC) has initiated an investigation into several major companies concerning their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
The FTC has sent inquiries to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking information about how these practices affect privacy, competition, and consumer protection.
These firms utilize data-driven approaches, such as AI, to implement what is known as “surveillance pricing” or “dynamic pricing.” This practice enables companies to display varying prices for the same products to different consumers based on factors such as location, demographics, credit history, and browsing or shopping history.
Many of the companies targeted by the FTC provide transaction, sales, and pricing services to major businesses across the U.S. and globally. Task Software manages transactions for notable hospitality brands like McDonald’s and Starbucks, while Revionics offers retail price optimization software to companies such as Home Depot. Pros, which claims to deliver AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clientele and collaborates with Microsoft as a technology partner.
The FTC is aiming to clarify the “opaque market” that enables retailers to categorize consumers and set targeted prices for goods and services.
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 commission is specifically interested in four key 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 practices on the prices that customers pay.