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.
The regulator has issued information requests to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. This inquiry focuses on the implications of these pricing practices on privacy, competition, and consumer protection.
Companies utilize data tools in a method referred to as “surveillance pricing” or “dynamic pricing,” which enables them to present various prices for the same products based on individual consumer traits or behaviors. Factors like location, demographics, credit history, and shopping habits can influence these varying prices.
Many of these companies serve significant roles in the market, offering transaction, sales, and pricing services to notable businesses in the U.S. and internationally. For instance, Task Software supports several large hospitality chains, including McDonald’s and Starbucks. Revionics specializes in retail price optimization and analytics for major retailers such as Home Depot. Pros, which provides AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clients and partners with Microsoft in technology development.
The FTC aims to uncover details about this “opaque market” that segments shoppers and allows for targeted pricing of goods and services.
FTC Chair Lina Khan emphasized the risks associated with businesses collecting personal data, stating that this could lead to higher prices for consumers. She affirmed that Americans deserve transparency regarding how their data may be utilized to implement surveillance pricing, and the FTC’s investigation intends to clarify this complex landscape of pricing intermediaries.
The FTC is seeking information in four primary areas: the types of surveillance pricing products and services offered by each company, data collection methods, customer and sales data, and how these practices affect the pricing that consumers ultimately pay.