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.
The FTC has issued information requests to eight firms from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, to explore the implications of these pricing methods on privacy, competition, and consumer protection.
These companies employ a practice referred to as “surveillance pricing” or “dynamic pricing,” which adjusts prices for the same products based on individual consumer factors such as location, demographics, credit score, and shopping history.
Many of the firms being investigated serve major retailers and businesses both in the U.S. and internationally. Task Software is behind the transaction management systems for several hospitality giants, including McDonald’s and Starbucks. Revionics specializes in retail price optimization technology for global chains like Home Depot. Pros is known for its AI-driven pricing solutions, with clients that include Nestlé, HP, and United Airlines, and it partners with Microsoft for technology development.
The FTC aims to clarify the complexities of this market where consumer profiling leads to targeted pricing strategies.
“Companies that collect personal data from Americans risk compromising individuals’ privacy. It’s possible that these businesses are using this vast array of information to implement higher pricing for some consumers,” remarked FTC Chair Lina Khan. “Consumers deserve to understand if their personal data is being leveraged for surveillance pricing, and this inquiry will illuminate the obscure practices of pricing intermediaries.”
The FTC is seeking to gather information on four main topics: the types of surveillance pricing products and services each company provides; their data collection methods; customer and sales data; and how these practices affect the prices consumers ultimately pay.