The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence in implementing personalized pricing strategies.
The investigation targets eight firms, namely Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC issued requests for information on how these pricing methods affect privacy, competition, and consumer protection.
These companies utilize data-driven tactics, including artificial intelligence, to engage in what is referred to as “surveillance pricing” or “dynamic pricing.” This practice allows them to present varying prices for the same products to different consumers based on various factors such as location, demographics, credit histories, and browsing or shopping behaviors.
Many of the firms under scrutiny provide transaction and pricing services to some of the largest corporations in the United States and around the world. For instance, Task Software manages transactions for major hospitality brands like McDonald’s and Starbucks, while Revionics delivers retail price optimization solutions to global retailers, including Home Depot. Pros, which markets itself as an AI-powered pricing solutions provider, serves clients such as Nestlé, HP, and United Airlines, and is also allied with Microsoft for technology development.
The FTC aims to investigate the so-called “opaque market” that allows companies to categorize consumers and set targeted prices for various products and services. FTC Chair Lina Khan remarked, “Companies that collect personal data can compromise people’s privacy. They may be exploiting this wealth of personal information to impose higher prices on consumers. Americans need to understand if businesses are using detailed consumer data for surveillance pricing, and the FTC’s inquiry will illuminate this complex ecosystem of pricing intermediaries.”
The FTC’s information requests pertain to four main areas: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales data, and the impact of these surveillance practices on consumer pricing.