The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence in setting personalized prices.
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The FTC issued orders on Tuesday to eight companies across various industries—Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros—requesting information on how these pricing strategies impact privacy, competition, and consumer protection.
These companies utilize data tools, such as AI, to implement a practice referred to as “surveillance pricing” or “dynamic pricing,” which allows them to display different prices for the same products based on individual consumer characteristics and behaviors. Factors like location, demographic information, credit history, and shopping activity can influence these tailored pricing strategies.
Many of the affected companies offer transaction, sales, and pricing services to some of the largest businesses in the United States and around the world. Task Software handles transaction management for major hospitality brands like McDonald’s and Starbucks, while Revionics specializes in retail price optimization software for significant retailers such as Home Depot. The software company Pros, which claims to provide AI-driven pricing solutions, serves clients including Nestlé, HP, and United Airlines and is a technology partner of Microsoft.
The FTC aims to clarify this “opaque market,” which segments consumers and sets targeted pricing for goods and services.
“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,” stated FTC Chair Lina Khan. “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 FTC is focusing on four main areas: the types of surveillance pricing products and services offered by each company, data collection methods, customer and sales information, and how these surveillance practices affect the prices that consumers ultimately pay.