The Federal Trade Commission (FTC) has initiated an investigation into several significant companies regarding their use of customer data, algorithms, and artificial intelligence in setting personalized pricing.
Eight firms from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received information requests from the FTC. The agency aims to understand the implications of these pricing strategies on privacy, competition, and consumer protection.
Companies utilize data tools such as artificial intelligence in a method known as “surveillance pricing,” also referred to as “dynamic pricing,” where different prices are offered to consumers for the same items based on their individual attributes or behaviors. Factors influencing these prices may include location, demographics, credit history, and online shopping patterns.
Many of the organizations under scrutiny offer transaction and pricing services to some of the largest companies in the United States and around the world. For example, Task Software is the transaction management provider for notable hospitality brands like McDonald’s and Starbucks. Revionics delivers retail price optimization solutions to global retailers, including Home Depot. Pros, which markets itself as a provider of AI-driven pricing solutions, counts Nestlé, HP, and United Airlines as clients and collaborates with Microsoft.
The FTC is focused on uncovering the workings of this “opaque market” that analyzes consumer behavior to set targeted pricing for goods and services.
“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. “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 is particularly interested in four areas: the types of surveillance pricing products and services offered by each company, their data collection methods, sales and customer information, and the influence of these surveillance practices on the prices consumers ultimately pay.