The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their management of customer data, algorithms, and artificial intelligence for individualized pricing strategies.
On Tuesday, the FTC issued orders to eight companies across various sectors—Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros—requesting information about the implications of these pricing methods on privacy, competition, and consumer protection.
These companies use data tools, particularly AI, in a strategy known as “surveillance pricing” or “dynamic pricing,” which allows them to present different prices to consumers for identical products based on individual characteristics or behaviors. Factors influencing these price variations can include a buyer’s location, demographics, credit history, and their browsing or shopping patterns.
Many of the firms identified by the FTC offer transaction, sales, and pricing services to some of the largest corporations in both the U.S. and internationally. Task Software manages transactions for major hospitality brands like McDonald’s and Starbucks, while Revionics supplies retail price optimization software to numerous global chains, including Home Depot. Pros, which positions itself as a provider of AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clients and collaborates with Microsoft on technology development.
The FTC aims to clarify this “opaque market” that categorizes consumers and determines targeted pricing for various products and services.
“The use of Americans’ personal data poses potential risks to privacy,” stated FTC Chair Lina Khan. “Firms may be taking advantage of vast amounts of personal information to impose higher prices. Americans deserve transparency regarding whether businesses are utilizing detailed consumer data for surveillance pricing, and the FTC’s inquiry will illuminate this shadowy pricing environment.”
The FTC is focusing on four main areas for information gathering: the types of surveillance pricing products and services provided by each company, their methods of data collection, customer and sales information, and how these practices affect the prices consumers ultimately pay.