The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence in customized pricing strategies. This scrutiny involves eight firms from various sectors: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC issued orders seeking detailed information about the implications of these pricing practices on privacy, competition, and consumer protection.
These companies employ techniques referred to as “surveillance pricing” or “dynamic pricing,” which allow them to present different prices to customers for identical products, influenced by factors such as location, demographics, credit history, and individual shopping patterns.
Many of the businesses investigated offer transaction and pricing solutions to significant firms both in the U.S. and internationally. Task Software manages transactions for major hospitality brands, including McDonald’s and Starbucks. Revionics specializes in retail price optimization software for global chains like Home Depot. Pros, which promotes its AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clientele and is a technology partner with Microsoft.
The FTC aims to investigate the complexities of this “opaque market” where shoppers are categorized, and prices are strategically set for products and services.
FTC Chair Lina Khan emphasized the risks associated with data collection, 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.” Khan noted that Americans ought to be informed about how their data is used in surveillance pricing, and the FTC’s investigation aims to illuminate the obscure practices within this pricing ecosystem.
The FTC’s inquiry focuses on four critical areas: the nature of surveillance pricing products and services provided by each company; their data collection methods; the customer and sales information they maintain; and the influence of these surveillance practices on the final prices customers pay.