The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their practices involving customer data, algorithms, and artificial intelligence used for personalized pricing strategies.
On Tuesday, eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, were issued orders by the FTC to provide information on how these pricing tactics affect privacy, competition, and consumer protection.
Many businesses utilize data analysis tools, such as AI, to implement a strategy referred to as “surveillance pricing” or “dynamic pricing.” This approach involves presenting different prices for the same products to consumers based on various factors like location, demographics, credit history, and online behavior such as browsing or shopping history.
The companies under scrutiny often provide transaction, sales, and pricing solutions to leading firms in the United States and around the world. Notably, Task Software manages transactions for major hospitality brands, including McDonald’s and Starbucks, while Revionics delivers retail price optimization software to prominent retailers like Home Depot. Pros, a software enterprise known for its AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clients and collaborates with Microsoft as a technology partner.
The FTC aims to investigate this “opaque market” where consumer categorization leads to targeted pricing for various products and services.
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 in four critical areas: the types of surveillance pricing products and services offered by each company, methods of data collection, customer and sales information, and the ways these surveillance practices influence the prices that consumers ultimately pay.