The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence to personalize pricing for individuals.
On Tuesday, the FTC issued orders to eight firms—Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros—requesting information about how these practices affect privacy, competition, and consumer protection.
These companies utilize data tools in a practice known as “surveillance pricing,” also referred to as “dynamic pricing,” which allows them to display varying prices for the same products based on individual consumer characteristics or behaviors. Factors influencing these prices can include location, demographics, credit history, and prior browsing or shopping patterns.
Among the firms being investigated, Task Software is known for its transaction management services supporting major hospitality brands like McDonald’s and Starbucks. Revionics specializes in retail price optimization and analytics for global retailers such as Home Depot. Pros, an AI-driven software provider, serves various large clients including Nestlé, HP, and United Airlines, and partners with Microsoft in technology development.
The FTC aims to clarify the complexities of this “opaque market,” which enables the profiling of consumers and the implementation of targeted pricing strategies.
FTC Chair Lina Khan stated, “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 FTC’s inquiry focuses 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 impact of these surveillance practices on final pricing for consumers.