The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their methods of utilizing customer data, algorithms, and artificial intelligence to customize pricing for individuals.
On Tuesday, the FTC issued orders to eight firms from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking insights into how such pricing practices impact consumer privacy, competition, and protection.
Companies are employing a strategy known as “surveillance pricing,” or “dynamic pricing,” which involves presenting different prices to consumers for identical products based on individual characteristics or behaviors, such as location, demographics, credit history, and shopping history.
Many of the firms contacted by the FTC offer transaction, sales, and pricing services to some of the largest corporations in the U.S. and worldwide. Task Software supports several major hospitality brands, including McDonald’s and Starbucks. Revionics specializes in retail price optimization software and serves global chains, including Home Depot. Pros, which promotes itself as an AI-driven pricing solutions provider, has notable clients, including Nestlé, HP, and United Airlines, and collaborates with Microsoft as a technology development partner.
The FTC aims to uncover the workings of this “opaque market” that categorizes consumers and sets targeted pricing for goods and services.
FTC Chair Lina Khan emphasized the significance of this inquiry, stating, “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. 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 regulatory agency is specifically seeking information in four areas: the types of surveillance pricing products and services each company offers, their data collection methods, customer and sales information, and the influence of these practices on consumer pricing.