The Federal Trade Commission (FTC) has initiated an investigation into several major firms regarding their methods of utilizing customer data, algorithms, and artificial intelligence to customize pricing for individual consumers.
The agencies involved include Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC’s inquiry, announced on Tuesday, aims to gather insights into the implications of these pricing practices on privacy, competition, and consumer protection.
Companies are increasingly employing a technique known as “surveillance pricing,” or “dynamic pricing,” which allows them to present different prices for the same products based on various consumer attributes. These attributes can include location, demographics, credit history, and online behavior such as browsing and shopping history.
Many of the companies under scrutiny provide transaction, sales, and pricing solutions for some of the largest businesses in the United States and globally. For instance, Task Software manages transactions for numerous hospitality giants, including McDonald’s and Starbucks. Revionics offers retail price optimization software and pricing analytics to major global retailers, such as Home Depot. Pros, which positions itself as a provider of AI-driven pricing solutions, serves clients including Nestlé, HP, and United Airlines, and also collaborates with Microsoft as a technology development partner.
The FTC aims to clarify the complexities of this “opaque market,” where consumers are categorized and targeted with varying prices based on their profiles.
FTC Chair Lina Khan stated, “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 is seeking information on four main areas: the types of surveillance pricing products and services each company offers, data collection methods, customer and sales information, and the effect of these surveillance practices on the prices customers ultimately pay.