The Federal Trade Commission (FTC) has initiated an investigation into several major corporations regarding their practices surrounding customer data, algorithms, and artificial intelligence with respect to personalized pricing strategies.
On Tuesday, the FTC issued requests for information to eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency aims to examine how these pricing practices affect privacy, competition, and consumer protection.
These companies utilize data-driven strategies, known as “surveillance pricing” or “dynamic pricing,” to offer varying prices for the same products based on consumer-specific factors such as location, demographics, credit history, and shopping behavior.
Many of the firms involved supply transaction and pricing services to some of the largest businesses both in the U.S. and internationally. For instance, Task Software supports major hospitality brands like McDonald’s and Starbucks in transaction management, while Revionics delivers retail pricing optimization tools to companies like Home Depot. Pros is noted for its AI-driven pricing solutions and lists Nestlé, HP, and United Airlines among its clients. Additionally, Pros collaborates with Microsoft as a technology partner.
The FTC is aiming to address concerns regarding the “opaque market” that enables the categorization of consumers and the setting of targeted prices for various products 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 has outlined that its investigation will focus on four primary areas: the types of surveillance pricing products and services offered by the companies, their data collection methods, details regarding customer and sales information, and the effect of these surveillance practices on the prices consumers ultimately pay.