The Federal Trade Commission (FTC) has initiated an investigation involving several major companies regarding their practices of using customer data, algorithms, and artificial intelligence for personalized pricing.
In a related development, McDonald’s is now facing its first lawsuit linked to the E. coli outbreak associated with its Quarter Pounder burger.
The investigation targets eight firms across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC issued orders to these companies on Tuesday, seeking information about how these pricing strategies impact privacy, competition, and consumer protection.
These companies utilize tools, such as AI, to implement a method known as “surveillance pricing,” also referred to as “dynamic pricing,” which allows them to display varying prices for the same products to different consumers based on factors like location, demographics, credit history, and shopping behavior.
Many of the firms under scrutiny provide transaction, sales, and pricing services to some of the largest corporations in the U.S. and internationally. Task Software manages transactions for several major hospitality brands, including McDonald’s and Starbucks. Revionics supplies retail price optimization software and pricing analytics to global chains like Home Depot. Pros, which offers AI-driven pricing solutions, lists Nestlé, HP, and United Airlines among its clients and collaborates with Microsoft on technology development.
The FTC aims to investigate this “opaque market” that categorizes consumers and sets targeted prices for products 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 agency is focusing its inquiry on four primary areas: the types of surveillance pricing products and services offered by each company, the methods of data collection, customer and sales information, and the influence of these surveillance practices on the prices customers ultimately pay.