The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their utilization of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
Eight companies spanning various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received formal inquiries from the FTC on Tuesday. The agency seeks to understand the implications of these pricing methods on privacy, competition, and consumer protection.
These businesses employ advanced data analytics, including artificial intelligence, in a practice referred to as “surveillance pricing” or “dynamic pricing,” where different prices for the same products are presented to consumers based on various factors. These factors may encompass location, demographic information, credit backgrounds, and individual browsing or shopping habits.
Many of the firms approached by the FTC offer transaction, sales, and pricing services to numerous leading companies in the United States and around the world. For instance, Task is responsible for transaction management for major hospitality brands, including McDonald’s and Starbucks. Revionics supplies retail price optimization tools and analytics to companies like Home Depot. Pros, known for its AI-driven pricing solutions, serves clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft for technology development.
The FTC aims to clarify this “opaque market” that profiles consumers and assigns targeted pricing for various goods and services.
“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,” said FTC Chair Lina Khan in a statement. “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’s request focuses on four main areas: the types of 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 prices consumers ultimately pay.