The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
The inquiry targets eight companies across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. These firms have been ordered to provide information related to how their pricing practices may affect privacy, competition, and consumer protection.
Companies are known to utilize data tools, including AI, in a practice referred to as “surveillance pricing,” or “dynamic pricing,” which allows them to present different prices to consumers for the same products based on individual characteristics or behaviors, such as location, demographics, credit history, and past shopping behaviors.
Many of the investigated companies offer transaction, sales, and pricing services to some of the largest businesses both in the U.S. and internationally. For example, Task Software manages transactions for well-known hospitality brands like McDonald’s and Starbucks, whereas Revionics supplies retail price optimization software used by global chains like Home Depot. Additionally, Pros provides AI-driven solutions for pricing, with clients including Nestlé, HP, and United Airlines, and it partners with Microsoft in technology development.
The FTC aims to clarify the workings of this “opaque market,” where consumers are categorized and offered targeted prices on products and services.
FTC Chair Lina Khan highlighted the potential risks associated with the collection of personal data by firms, 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 is specifically seeking insights into four main areas: the types of surveillance pricing products and services offered by each company; methods of data collection; customer and sales information; and the influence of these practices on the final prices customers are charged.