The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their utilization 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, have been summoned by the FTC to provide insights on the effects of these pricing strategies on consumer privacy, competition, and protection.
These companies engage in a practice known as “surveillance pricing,” often referred to as “dynamic pricing.” This approach allows firms to display varying prices for the same products based on consumers’ characteristics or behavior, such as their location, demographic details, credit history, and previous shopping patterns.
Many of the entities targeted by the FTC are significant players in transaction, sales, and pricing services for major businesses across the United States and internationally. Task Software plays a critical role in transaction management for major hospitality brands, including McDonald’s and Starbucks. Revionics is known for its retail price optimization software, serving a number of prominent chains like Home Depot. Pros, which claims to offer AI-driven pricing solutions, has notable clients such as Nestlé, HP, and United Airlines, and also collaborates with Microsoft as a technology development partner.
The FTC aims to uncover the intricacies of this “opaque market” that classifies consumers and determines targeted pricing for a variety of products and services. FTC Chair Lina Khan expressed concern, 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. 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; the methods of data collection; information on customers and sales; and the impact of these surveillance practices on the prices consumers ultimately face.