The Federal Trade Commission (FTC) has initiated an investigation into several major firms regarding their use of customer data, algorithms, and artificial intelligence to implement personalized pricing strategies.
Eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received formal requests for information from the agency on Tuesday. The FTC aims to understand the effects of these practices on privacy, competition, and consumer protection.
These companies utilize data-driven methods, often referred to as “surveillance pricing” or “dynamic pricing,” which allows them to present varying prices for the same products based on individual consumer characteristics such as location, demographics, credit history, and shopping behavior.
Many organizations involved provide transaction, sales, and pricing services to leading U.S. and international firms. Task is notable for its transaction management services for major hospitality brands like McDonald’s and Starbucks. Revionics specializes in retail price optimization and analytics and serves several large chains, including Home Depot. Pros, which claims to offer AI-driven pricing solutions, lists clients like Nestlé, HP, and United Airlines, and collaborates with Microsoft for technology development.
The FTC aims to clarify the complexities surrounding this “opaque market” that classifies consumers and sets targeted pricing for products and services.
“Companies that gather personal data can jeopardize people’s privacy. They may also be taking advantage of this wealth of personal information to impose higher prices,” stated FTC Chair Lina Khan. “Americans deserve transparency regarding whether businesses are leveraging detailed consumer data to implement surveillance pricing, and this inquiry will illuminate this obscure pricing ecosystem.”
The FTC is seeking insights in four main areas: the types of surveillance pricing products and services each company offers; their data collection methods; customer and sales information; and the impact of these practices on pricing.