The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to customize pricing for individual consumers.
Eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received subpoenas from the FTC seeking insights into how these pricing strategies affect privacy, competition, and consumer protection.
These companies employ data-driven techniques, commonly referred to as “surveillance pricing” or “dynamic pricing,” which allows them to display varying prices for the same products based on individual consumer characteristics or behaviors, such as location, demographics, credit history, and browsing or shopping habits.
The firms targeted by the FTC play a significant role in providing transaction, sales, and pricing services for major American and international businesses. For instance, Task Software is linked to major hospitality brands such as McDonald’s and Starbucks, while Revionics offers price optimization software to global retail chains like Home Depot. Pros, which specializes in AI-powered pricing solutions, serves clients including Nestlé, HP, and United Airlines and partners with Microsoft for technology development.
The FTC aims to clarify the workings of this “opaque market” that segments shoppers and enforces personalized pricing on goods and services.
“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,” stated FTC Chair Lina Khan. “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 commission is focusing on four main areas in its investigation: the types of surveillance pricing products and services provided by each company, their data collection methods, customer and sales information, and the impact of these practices on the pricing customers ultimately face.