The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to personalize pricing for individual consumers.
On Tuesday, the agency issued orders to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking information on how these pricing strategies affect privacy, competition, and consumer protection.
These companies utilize data-driven tools, commonly referred to as “surveillance pricing” or “dynamic pricing,” which adjusts prices for the same products based on various consumer attributes, such as location, demographics, credit history, and shopping habits.
Many of the firms under scrutiny provide essential transaction, sales, and pricing services to some of the largest companies in the United States and around the world. For instance, Task Software manages transactions for major hospitality brands like McDonald’s and Starbucks, while Revionics offers pricing analytics and optimization software to global retailers, such as Home Depot. Pros, which markets itself as an AI-driven pricing solutions provider, serves clients including Nestlé, HP, and United Airlines, and has a technology partnership with Microsoft.
The FTC aims to clarify the “opaque market” that utilizes customer categorization to set targeted pricing strategies for various products and services.
“Firms that harvest Americans’ personal data can jeopardize privacy. It appears some companies may be using extensive personal information to charge higher prices,” stated FTC Chair Lina Khan. “Americans deserve transparency about whether businesses are leveraging detailed consumer data in their pricing strategies, and this inquiry will illuminate the obscure network of pricing intermediaries.”
The FTC is particularly interested in four main areas: the types of surveillance pricing products and services offered by these companies, their data collection methods, customer and sales information, and how these surveillance practices affect the prices customers ultimately pay.