The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their practices of utilizing customer data, algorithms, and artificial intelligence to set tailored pricing strategies.
The FTC has issued information requests to eight companies across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency aims to understand the implications of these pricing methods on consumer privacy, competition, and protection.
These companies engage in what’s known as “surveillance pricing” or “dynamic pricing,” which involves displaying different prices to consumers based on their attributes or behaviors, such as geographic location, demographic details, credit history, and past shopping activities.
Many of the firms contacted by the FTC are key providers of transaction, sales, and pricing services to major businesses in the United States and worldwide. Task Software handles transaction management for notable hospitality chains like McDonald’s and Starbucks. Revionics offers retail pricing optimization software to major retailers, including Home Depot. Pros, which specializes in AI-powered pricing solutions, counts major corporations like Nestlé, HP, and United Airlines among its clients, and collaborates with Microsoft on technology development.
The FTC’s inquiry aims to clarify the complexities of this “opaque market,” where shoppers are classified and variable prices are set for goods and services.
In a statement, FTC Chair Lina Khan emphasized the risks associated with companies collecting extensive personal data. She expressed concern that those companies may be using this information to impose higher prices on consumers. “Americans deserve to know whether businesses are utilizing detailed consumer data for surveillance pricing,” she stated, adding that the FTC’s investigation will help unveil the intricate dynamics at play among pricing intermediaries.
The FTC is seeking information regarding four main areas: the specific surveillance pricing products and services each company offers, their data collection methods, relevant customer and sales information, and the effects of these surveillance practices on the prices consumers ultimately pay.