The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence to personalize pricing strategies.
On Tuesday, the FTC issued information requests to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. This inquiry focuses on how these pricing practices affect privacy, competition, and consumer protection.
The companies under investigation utilize data-driven approaches such as “surveillance pricing” or “dynamic pricing,” which allows them to display different prices for the same products based on various consumer characteristics and behaviors. Factors influencing these prices may include a consumer’s location, demographics, credit history, and prior shopping habits.
Many of the firms contacted play pivotal roles in providing transaction, sales, and pricing services to significant corporations both in the U.S. and internationally. For instance, Task Software manages transactions for prominent hospitality brands like McDonald’s and Starbucks, while Revionics offers retail pricing optimization tools to retailers such as Home Depot. Pros, a software company specializing in AI-based pricing solutions, has clients including Nestlé, HP, and United Airlines, and has partnerships with Microsoft.
The FTC aims to clarify the complexities of this increasingly opaque market, where businesses categorize consumers to set targeted prices. FTC Chair Lina Khan expressed concern that companies exploiting consumers’ personal data could threaten their privacy and potentially lead to increased costs for customers. She affirmed the necessity for transparency regarding the use of consumer data in pricing mechanisms, stating that the inquiry would illuminate the obscure world of pricing intermediaries.
The FTC is particularly interested in gathering information on the types of surveillance pricing products offered by these companies, their data collection methods, customer and sales data, and the overall impact of these practices on consumer pricing.