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 strategies.
Eight companies from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have received requests from the FTC for information about how these pricing practices affect privacy, competition, and consumer protection.
These companies utilize data-driven tools, such as AI, to implement a practice known as “surveillance pricing” or “dynamic pricing,” which enables them to display different prices for the same products based on consumer characteristics or behaviors, such as location, demographics, credit history, and online activity.
Many of the firms targeted by the FTC are involved in providing transaction, sales, and pricing services to major businesses both in the United States and globally. For instance, Task Software manages transactions for several well-known hospitality brands, including McDonald’s and Starbucks. Revionics offers retail price optimization and pricing analytics to many global retailers, including Home Depot. Pros, which specializes in AI-powered pricing solutions, counts Nestlé, HP, and United Airlines among its clients and collaborates with Microsoft.
The FTC aims to understand the complexities of what it calls an “opaque market,” where consumers are categorized and charged varying prices for products and services.
“Firms that collect Americans’ personal data can jeopardize people’s privacy. Now companies might be misusing this extensive personal information to impose higher prices,” said FTC Chair Lina Khan in a statement. “Americans deserve transparency regarding whether businesses are utilizing detailed consumer data for surveillance pricing, and the FTC’s investigation will illuminate this obscure network of pricing intermediaries.”
The FTC is seeking information in four main areas: the types of surveillance pricing products and services offered by each company, data collection methods, customer and sales data, and the influence of these surveillance practices on the prices customers ultimately pay.