The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their utilization of customer data, algorithms, and artificial intelligence to customize pricing strategies.
The inquiry focuses on eight firms from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC has issued information requests to these companies concerning the implications of their pricing methods on privacy, competition, and consumer protection.
Many businesses are engaging in a practice referred to as “surveillance pricing” or “dynamic pricing,” which involves presenting different prices to consumers based on various attributes such as location, demographics, credit history, and shopping behavior. Companies like Task, which manages transactions for major hospitality brands like McDonald’s and Starbucks, and Revionics, which offers retail price optimization software to large retailers including Home Depot, play crucial roles in this pricing ecosystem. Pros, a software firm known for its AI-driven pricing solutions, works with clients such as Nestlé, HP, and United Airlines, and it collaborates with Microsoft as a technology partner.
The FTC aims to explore this “opaque market” that identifies shoppers and assigns targeted prices for products and services. FTC Chair Lina Khan expressed concerns about the potential risks to consumer privacy, stating, “Companies that use Americans’ personal data may be putting their privacy at risk. Now firms could be exploiting this vast trove of personal information to charge higher prices. Americans deserve to know whether businesses are leveraging detailed consumer data to implement surveillance pricing, and the FTC’s inquiry will illuminate this shadowy ecosystem of pricing middlemen.”
In its investigation, the FTC is seeking insights on four primary areas: the types of surveillance pricing products and services offered by these companies; their data collection methods; customer and sales data; and the effects of these practices on the prices consumers ultimately pay.