The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their utilization of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
Eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have been ordered by the FTC to provide insights on how these pricing techniques affect privacy, competition, and consumer protection.
These companies employ tools such as AI to implement a strategy often referred to as “surveillance pricing” or “dynamic pricing.” This approach enables them to present different prices for identical products to various consumers based on individual characteristics and behaviors, including location, demographics, credit history, and shopping habits.
Many firms involved in this investigation facilitate transaction, sales, and pricing services for major corporations in the U.S. and internationally. Task Software is known for managing transactions for prominent hospitality brands like McDonald’s and Starbucks, while Revionics specializes in retail price optimization software for global retailers like Home Depot. Pros, which promotes AI-driven pricing solutions, has clients that include Nestlé, HP, and United Airlines and collaborates with Microsoft for technology development.
The FTC aims to clarify the complexities of this “opaque market” that enables businesses to categorize consumers and apply targeted pricing.
FTC Chair Lina Khan remarked, “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 FTC is seeking information on four primary aspects: the types of surveillance pricing products and services each company provides, their data collection methods, customer and sales information, and the impact of these practices on consumer pricing.