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.
On Tuesday, the FTC issued information requests to eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency is exploring the effects of these pricing methods on consumer privacy, competition, and protection.
These companies utilize data tools, including AI, in a practice known as “surveillance pricing,” or sometimes “dynamic pricing,” which allows them to present different prices for the same products based on various consumer characteristics and behaviors, such as location, demographics, credit history, and online shopping habits.
Many of the firms under scrutiny provide transaction and pricing services to some of the largest companies in the United States and worldwide. Task Software manages transactions for major hospitality brands, including McDonald’s and Starbucks. Revionics offers retail price optimization software to several global retailers, including Home Depot. Pros, which markets itself as a provider of 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 of this “opaque market” that segments shoppers and assigns targeted prices for goods and services. FTC Chair Lina Khan expressed concern, 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 seeking information on four main areas: the types of surveillance pricing services offered by each firm, their data collection methods, customer and sales data, and how these practices affect the prices customers ultimately pay.