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 for individual consumers.
On Tuesday, the FTC issued orders to eight companies across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking details on how these pricing strategies affect privacy, competition, and consumer protection.
These companies are employing techniques referred to as “surveillance pricing” or “dynamic pricing,” which allow them to present different prices for the same products based on individual consumer traits such as location, demographics, credit history, and browsing patterns.
Many of the targeted firms offer transaction and pricing services to some of the largest businesses both in the United States and internationally. For instance, Task manages transactions for notable hospitality brands like McDonald’s and Starbucks, while Revionics supplies pricing analytics and retail price optimization software to chains including Home Depot. Pros, which claims to provide AI-driven pricing solutions, has clients like Nestlé, HP, and United Airlines, and is also partnered with Microsoft for technology development.
The FTC aims to clarify the complexities of this “opaque market,” which categorizes consumers and sets tailored prices for goods and services. FTC Chair Lina Khan emphasized that companies utilizing personal data could jeopardize consumer privacy and potentially charge higher prices based on this information. She stated, “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 agency is seeking information on four main aspects: the types of surveillance pricing products and services provided by each company, their methods of data collection, relevant customer and sales data, and the influence of these practices on the final prices paid by consumers.