The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to implement personalized pricing strategies.
Eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received inquiries from the FTC on Tuesday. The agency is seeking insights into how these practices affect privacy, competition, and consumer protection.
Many companies utilize data tools, including artificial intelligence, to engage in what is known as “surveillance pricing” or “dynamic pricing.” This approach allows them to present different pricing to consumers based on various factors such as location, demographics, credit history, and online shopping behaviors.
The firms contacted by the FTC play significant roles in providing transaction, sales, and pricing services to major corporations both in the U.S. and internationally. For instance, Task Software supports notable hospitality brands like McDonald’s and Starbucks, while Revionics offers price optimization software to retailers, including Home Depot. Pros markets itself as an AI-driven pricing solution provider and has clients such as Nestlé, HP, and United Airlines. Additionally, Pros collaborates with Microsoft for technology development.
The FTC aims to investigate the “opaque market” that enables businesses to categorize consumers and set personalized prices for their offerings. “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,” stated FTC Chair Lina Khan. She emphasized the importance of transparency, noting that Americans deserve clarity regarding whether companies are employing detailed consumer data for surveillance pricing, and that the inquiry would illuminate this complex pricing ecosystem.
The FTC is focusing on four main areas: the types of surveillance pricing products and services offered by each company, data collection methods, customer and sales information, and the influences of these practices on consumer pricing.