The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to implement individualized pricing strategies.
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The FTC has issued orders to eight companies across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking information on how these pricing practices affect privacy, competition, and consumer protection.
These firms leverage data tools, particularly AI, to engage in what is referred to as “surveillance pricing” or “dynamic pricing,” which allows them to display different prices for the same products based on individual consumer traits such as location, demographics, credit history, and browsing or shopping habits.
Many companies targeted by the FTC supply transaction, sales, and pricing services to large corporations both in the U.S. and internationally. Task Software, for instance, manages transactions for well-known hospitality brands, including McDonald’s and Starbucks. Revionics offers retail price optimization software and pricing analytics to major retail chains like Home Depot, while Pros provides AI-driven pricing solutions to clients such as Nestlé, HP, and United Airlines, and is a technology partner of Microsoft.
The FTC aims to uncover practices in this “opaque market” where shoppers are categorized for the purpose of setting targeted prices on 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 commission is focusing on four main areas during its investigation: the types of surveillance pricing products and services offered by these companies, their data collection methods, relevant customer and sales data, and the influence of these surveillance practices on the prices consumers pay.