The Federal Trade Commission (FTC) has initiated an investigation into several large companies regarding their methods of utilizing customer data, algorithms, and artificial intelligence for personalized pricing strategies.
On Tuesday, the FTC issued orders to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking information on how these pricing practices affect privacy, competition, and consumer protection.
These companies engage in a method known as “surveillance pricing” or “dynamic pricing,” where varying prices for the same products are presented to consumers based on factors such as location, demographics, credit history, and online shopping behavior.
Many of the firms in question provide transaction and pricing services to some of the largest businesses in the United States and abroad. Task Software manages transactions for major hospitality companies, including McDonald’s and Starbucks. Revionics offers retail price optimization software to major retailers like Home Depot, while Pros, which specializes in AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clients. Furthermore, Pros collaborates with Microsoft as a technology development partner.
The FTC aims to clarify this “opaque market” that categorizes consumers and establishes targeted pricing for goods and services.
“Businesses that collect personal data from Americans risk compromising their privacy. Now, these firms might exploit this extensive range of personal information to impose higher prices,” stated FTC Chair Lina Khan. “Consumers deserve transparency regarding whether companies are utilizing detailed data for surveillance pricing, and the FTC’s investigation will illuminate this obscure pricing network.”
The FTC is specifically seeking information on four main aspects: the types of surveillance pricing products and services offered by each company, the methods of data collection, customer and sales data, and the impact of these surveillance practices on the prices consumers pay.