The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
The FTC issued orders on Tuesday to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking details on how these pricing practices affect privacy, competition, and consumer protection.
These businesses utilize tools such as AI to implement a method known as “surveillance pricing” or “dynamic pricing,” where different prices are presented to consumers based on various characteristics or behaviors, including location, demographics, credit history, and browsing or shopping habits.
Many companies involved in this investigation provide transaction, sales, and pricing services to some of the largest organizations in the U.S. and worldwide. Task Software manages transactions for major hospitality brands like McDonald’s and Starbucks, while Revionics offers retail price optimization software to several global retailers, including Home Depot. Pros, which claims to provide AI-driven pricing solutions, has clients such as Nestlé, HP, and United Airlines, and partners with Microsoft for technology development.
The FTC aims to uncover the complexities of this “opaque market” that categorizes consumers and sets targeted prices for products and services.
FTC Chair Lina Khan stated, “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 regulatory agency is specifically interested in four key areas: the types of surveillance pricing products and services offered by each company, data collection methods, customer and sales information, and the influence of these practices on the prices customers ultimately pay.