The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their practices related to customer data, algorithms, and artificial intelligence in the context of personalized pricing strategies.
On Tuesday, the agency issued information requests to eight firms spanning various industries, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC is seeking details about how these pricing methods affect privacy, competition, and consumer protection.
These companies employ advanced data tools, including AI, to implement a pricing 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 such as location, demographics, credit history, and past shopping patterns.
Many of the firms approached by the FTC are providers of transaction, sales, and pricing solutions to some of the largest businesses in the U.S. and around the world. Task Software supports major hospitality chains, including McDonald’s and Starbucks. Revionics offers pricing analytics and retail price optimization software to global retailers, including Home Depot. Pros, which promotes itself as a provider of AI-driven pricing solutions, serves clients like Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC aims to investigate what it terms an “opaque market” in which consumers are categorized and targeted with specific prices for various products and services.
“Companies that collect personal data from Americans can jeopardize people’s privacy. There is a concern that these companies may exploit the extensive personal data they gather to charge higher prices,” stated FTC Chair Lina Khan. “Americans deserve transparency about whether businesses are utilizing detailed consumer data to implement surveillance pricing, and our inquiry will illuminate this unclear ecosystem filled with pricing intermediaries.”
The FTC is particularly focused on four main areas: the types of surveillance pricing products and services offered by these companies, their data collection methods, customer and sales information, and the impact of these practices on consumer pricing.