The Federal Trade Commission (FTC) has initiated an investigation into several major companies concerning their use of customer data, algorithms, and artificial intelligence to set individualized pricing. Eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, were issued orders on Tuesday to provide information about the implications of these pricing strategies on privacy, competition, and consumer protection.
Companies utilize data tools, particularly AI, in a practice known as “surveillance pricing,” also referred to as “dynamic pricing,” which enables them to display varying prices for the same products to different consumers based on factors such as location, demographics, credit history, and browsing or shopping habits.
Many of the firms approached by the FTC offer transaction, sales, and pricing services to some of the largest corporations in the United States and worldwide. Task Software, for instance, manages transactions for major hospitality businesses like McDonald’s and Starbucks, while Revionics delivers retail price optimization software and pricing analytics to global retailers including Home Depot. Pros, a company specializing in AI-driven pricing solutions, serves notable clients such as Nestlé, HP, and United Airlines and collaborates with Microsoft for technology development.
The FTC aims to investigate this “opaque market” that classes consumers and sets targeted prices for various 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 agency is seeking information in four main areas: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales information, and the influence of these surveillance practices on the prices consumers ultimately pay.