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.
Eight companies from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have received inquiries from the regulatory body. The FTC is seeking insights on how these pricing strategies affect privacy, competition, and consumer protection.
These businesses utilize data-driven methods called “surveillance pricing” or “dynamic pricing” to display varying prices for identical products based on individual customer characteristics such as location, demographics, credit history, and browsing or shopping patterns.
Several of the firms involved assist major players in the U.S. and international markets with transaction, sales, and pricing services. Task Software manages transactions for notable hospitality brands like McDonald’s and Starbucks, while Revionics offers retail price optimization to chains including Home Depot. Pros, a software provider that highlights its AI-driven pricing solutions, serves clients like Nestlé, HP, and United Airlines, and collaborates with Microsoft in technology development.
The FTC aims to clarify the complexities of this “opaque market,” which tailors shopper categories and establishes targeted pricing for goods and services.
FTC Chair Lina Khan stated, “Companies that gather personal data from Americans can jeopardize their privacy. Now, they may be leveraging this extensive personal information to impose higher prices. Americans have the right to know if their data is enabling surveillance pricing, and the FTC’s investigation will illuminate this concealed pricing network.”
The agency is specifically requesting information on four crucial aspects: the types of surveillance pricing products and services offered by each company, the methods of data collection, customer and sales data, and the impact of these practices on consumer pricing.