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 strategies.
Eight companies from various sectors—Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros—were issued orders by the FTC this Tuesday, requesting details on how these pricing practices may affect privacy, competition, and consumer protection.
These firms employ tools such as AI to implement a strategy referred to as “surveillance pricing,” also known as “dynamic pricing,” where prices for identical products can differ for consumers based on their personal attributes or actions. Factors influencing these variations can include location, demographics, credit history, and browsing or shopping behavior.
Many of the firms being scrutinized provide transaction and pricing services to major businesses both in the U.S. and internationally. Task Software supports transaction management for significant hospitality brands such as McDonald’s and Starbucks. Revionics offers pricing optimization software and analytics to numerous global retail chains, including Home Depot. Pros, which markets itself as a provider of AI-driven pricing solutions, serves high-profile clients such as Nestlé, HP, and United Airlines, and partners with Microsoft for technology development.
The FTC aims to investigate the “opaque market” that identifies shoppers and establishes tailored prices for products and services.
“Companies that collect and utilize Americans’ personal data may jeopardize individuals’ privacy. There is a concern that these firms could be taking advantage of extensive personal information to impose higher prices,” stated FTC Chair Lina Khan. “Americans deserve to understand if businesses are leveraging detailed consumer data for surveillance pricing, and the FTC’s inquiry intends to illuminate this obscure pricing ecosystem.”
The FTC is seeking information in four primary areas: the types of surveillance pricing products and services offered by each company, data collection methods, customer and sales information, and the influence of these surveillance practices on consumer pricing.