The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their practices related to customer data, algorithms, and artificial intelligence in relation to personalized pricing strategies.
The FTC has reached out to eight firms across various sectors—Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros—to gather information on how their pricing methods might affect privacy, competition, and consumer rights.
These companies utilize data-driven techniques, including artificial intelligence, to implement what is known as “surveillance pricing” or “dynamic pricing.” This approach allows businesses to offer different prices for the same products based on the characteristics or behaviors of consumers, such as their location, demographics, credit history, and shopping behavior.
Many of the firms involved in the investigation provide transaction and pricing services to numerous major corporations in the U.S. and internationally. Task Software, for example, handles transaction management for large hospitality brands like McDonald’s and Starbucks, while Revionics specializes in retail price optimization software for significant companies like Home Depot. Pros, which offers AI-powered pricing solutions, serves clients including Nestlé, HP, and United Airlines, and is also a tech development partner with Microsoft.
The FTC aims to clarify the “opaque market” that enables companies to categorize consumers and set tailored prices for products and services. FTC Chair Lina Khan remarked, “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 seeking information in four main areas: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales information, and the influence of these practices on the prices paid by consumers.