The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their practices surrounding the use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
The inquiry involves eight firms from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. On Tuesday, the FTC issued orders for information to these companies concerning the implications of their pricing methods on privacy, competition, and consumer protection.
These companies utilize tools, such as AI, to implement what is known as “surveillance pricing,” also referred to as “dynamic pricing,” where different prices are presented to customers for the same products based on their characteristics and behaviors—factors including location, demographics, credit history, and shopping history.
Many of the firms engaged by the FTC play a vital role in providing transaction, sales, and pricing services to some of the largest businesses in the U.S. and worldwide. For example, Task Software manages transaction processes for several hospitality giants, including McDonald’s and Starbucks. Revionics offers retail price optimization and pricing analytics to prominent retailers like Home Depot, while Pros, known for its AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clientele and collaborates with Microsoft on technology development.
The FTC aims to uncover the details behind this “opaque market,” which categorizes shoppers and establishes targeted pricing models.
FTC Chair Lina Khan stated, “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 FTC is seeking information in four main areas: the specific types of surveillance pricing products and services offered by each company, methods of data collection, customer and sales information, and the influence of these surveillance practices on the pricing experienced by customers.