The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to customize pricing strategies.
Eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have received requests from the FTC for information concerning the implications of these pricing methods on privacy, competition, and consumer protection.
These businesses employ technologies, such as AI, to implement a practice known as “surveillance pricing” or “dynamic pricing,” which displays different prices for the same products to different consumers based on various factors including location, demographics, credit history, and browsing or shopping behavior.
Many of the firms under scrutiny provide transaction, sales, and pricing services to some of the largest companies in the U.S. and around the world. Task Software, for example, manages transactions for significant hospitality brands like McDonald’s and Starbucks. Revionics offers retail price optimization software to global chains, including Home Depot, while Pros, which markets AI-driven pricing solutions, lists Nestlé, HP, and United Airlines among its clients and partners with Microsoft on technology development.
The FTC aims to understand the workings of this “opaque market” that profiles consumers and assigns targeted prices to products and services. FTC Chair Lina Khan remarked that companies utilizing Americans’ personal data may pose risks to privacy and could be exploiting this information to set higher prices. She emphasized the need for transparency regarding businesses’ use of detailed consumer data in pricing tactics, stating that the inquiry will illuminate the intricate network involved in pricing strategies.
The FTC is seeking information in four primary areas: the types of surveillance pricing services offered by each company; methods of data collection; customer and sales information; and the extent to which these surveillance practices affect the prices that consumers ultimately pay.