The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence to personalize pricing strategies.
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The FTC’s investigation targets eight companies: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The regulatory agency has requested information regarding how these pricing strategies affect privacy, competition, and consumer protection.
These companies utilize data tools, often referred to as “surveillance pricing” or “dynamic pricing,” to display varying prices for the same products based on factors such as location, demographics, credit history, and past shopping behavior.
Many of the firms involved in the FTC inquiry offer transaction, sales, and pricing services to some of the largest businesses both in the United States and internationally. Task Software supports numerous major hospitality brands such as McDonald’s and Starbucks. Revionics delivers retail price optimization software and pricing analytics to many global retailers, including Home Depot. Pros, known for its AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clients and collaborates with Microsoft on technology development.
The FTC aims to clarify the nature of this “opaque market” that classifies shoppers and applies targeted pricing for various products 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 FTC is seeking information in four main areas: the types of surveillance pricing products and services offered by each company, the methods of data collection, customer and sales information, and how these surveillance practices affect the prices consumers pay.