The Federal Trade Commission (FTC) has initiated an investigation into several major corporations regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
The agencies involved include Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, which were all issued information requests by the FTC to assess the implications of these practices on privacy, competition, and consumer protection.
Companies are implementing a technique referred to as “surveillance pricing” or “dynamic pricing,” which allows them to display varying prices to different consumers based on specific attributes or behaviors such as location, demographics, credit history, and online activity.
Many firms contacted by the FTC are key providers of transaction, sales, and pricing services to many prominent companies in the U.S. and internationally. Task Software manages transactions for significant hospitality brands, including McDonald’s and Starbucks. Revionics specializes in retail price optimization and analytics software for global retailers like Home Depot. Pros, which offers AI-driven pricing solutions, counts clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft as a technology partner.
The FTC aims to clarify the “opaque market” that categorizes consumers and establishes targeted prices for various products and services.
FTC Chair Lina Khan remarked, “Companies that collect Americans’ personal data risk compromising privacy. Now, these firms may be exploiting extensive personal information to impose higher prices. Americans deserve transparency regarding whether businesses are utilizing detailed consumer data to implement surveillance pricing, and the FTC’s investigation will provide insight into this obscure network of pricing intermediaries.”
The FTC is particularly interested in collecting information on four main areas: the types of surveillance pricing products and services offered by each company, their data collection methods, information on customers and sales, and the effect of these practices on the prices consumers ultimately pay.