The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to customize pricing for individuals.
Eight companies from various sectors — Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros — received inquiries from the FTC on Tuesday. The agency seeks to understand how these pricing strategies may affect privacy, competition, and consumer protection.
These firms utilize data-driven tools like artificial intelligence in a practice known as “surveillance pricing” or “dynamic pricing,” where different prices are presented to consumers for identical products based on individual characteristics or behaviors, such as location, demographics, credit history, and online shopping habits.
Many of the companies investigated by the FTC play pivotal roles in providing transaction, sales, and pricing services to major brands in the U.S. and internationally. Task Software manages transactions for significant hospitality brands, including McDonald’s and Starbucks. Revionics offers pricing optimization software to several global retailers, including Home Depot. Pros, which specializes in AI-driven pricing solutions, serves clients like Nestlé, HP, and United Airlines and partners with Microsoft for technology development.
The FTC aims to clarify the complexities in this “opaque market,” which involves categorizing shoppers and establishing targeted prices for goods and services.
FTC Chair Lina Khan emphasized the potential risks posed by companies that collect vast amounts of personal data, stating, “Firms that harvest Americans’ personal data can put people’s privacy at risk. Now firms could be exploiting this vast trove of personal information to charge people higher prices. Americans deserve to know whether businesses are using detailed consumer data to deploy surveillance pricing, and the FTC’s inquiry will shed light on this shadowy ecosystem of pricing middlemen.”
The FTC’s inquiry focuses on four main areas: the types of surveillance pricing products and services offered by each company, data collection methods, customer and sales information, and the impact of these practices on consumer pricing.