The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their practices involving customer data, algorithms, and artificial intelligence in relation to personalized pricing strategies.
Eight firms from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have received requests from the agency for information concerning the effects of these pricing methods on privacy, competition, and consumer protection.
These companies utilize advanced data tools, such as artificial intelligence, to implement a pricing strategy known as “surveillance pricing” or “dynamic pricing,” which allows them to offer different prices to consumers for identical products based on individual characteristics such as location, demographics, credit history, and browsing or shopping patterns.
Many of the firms under investigation provide transaction, sales, and pricing services to some of the largest companies both in the United States and internationally. Task, for instance, manages transactions for major hospitality brands like McDonald’s and Starbucks. Revionics supplies retail price optimization software to a number of global chains, including Home Depot. Pros is recognized for its AI-driven pricing solutions, servicing clients like Nestlé, HP, and United Airlines, and also partners with Microsoft for tech development.
The FTC aims to elucidate an “opaque market” that identifies customers and assigns targeted prices for various goods and services.
FTC Chair Lina Khan commented, “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 agency is seeking information across four main areas: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales details, and how these surveillance practices impact the prices consumers ultimately pay.