The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
Among the companies under scrutiny are Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The regulatory agency issued orders on Tuesday requesting information about how these pricing practices affect privacy, competition, and consumer protection.
These firms utilize data-driven techniques, often referred to as “surveillance pricing” or “dynamic pricing,” which allows them to present different prices for the same products based on various consumer characteristics and behaviors, such as location, demographics, credit history, and online activity.
Many of the companies involved provide transaction, sales, and pricing services to some of the largest corporations in the U.S. and worldwide. Task Software supports several major hospitality businesses, including McDonald’s and Starbucks. Revionics specializes in retail price optimization and pricing analytics for global chains like Home Depot. Pros, known for its AI-powered pricing solutions, counts Nestlé, HP, and United Airlines as clients and collaborates with Microsoft on technology development.
The FTC aims to clarify the complexities of this “opaque market,” which categorizes consumers and sets targeted prices for goods and services.
FTC Chair Lina Khan emphasized the potential risks to consumer privacy, stating, “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’s inquiry will focus on four main areas: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales information, and how these surveillance practices impact the prices that consumers pay.