The Federal Trade Commission (FTC) has initiated an investigation into several major corporations regarding their use of customer data, algorithms, and artificial intelligence in personalized pricing strategies.
The inquiry involves eight companies from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. These firms have been ordered to provide information about how their pricing practices may affect privacy, competition, and consumer protection.
Companies are utilizing data tools, including AI, to implement a method known as “surveillance pricing,” also referred to as “dynamic pricing.” This approach allows businesses to offer different prices for the same products based on consumer characteristics such as location, demographics, credit history, and online shopping behavior.
Many of the involved companies provide pricing and transaction services to some of the largest corporations in the United States and internationally. Task Software supports various hospitality firms, including McDonald’s and Starbucks, while Revionics specializes in retail price optimization for major chains like Home Depot. Pros, which promotes itself as an AI solutions provider for pricing, counts Nestlé, HP, and United Airlines among its clients and collaborates with Microsoft on technology development.
The FTC aims to uncover details in what it describes as an “opaque market” that categorizes shoppers and establishes targeted prices for goods and services.
“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,” commented FTC Chair Lina Khan. “Americans deserve to know whether businesses are using detailed consumer data to implement surveillance pricing, and the FTC’s inquiry will illuminate this shadowy ecosystem of pricing intermediaries.”
The FTC is seeking information in four primary areas: the types of surveillance pricing products and services provided by each company, the methods of data collection, customer and sales information, and how these surveillance practices affect the prices consumers ultimately pay.