The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their utilization of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
The inquiry targets eight firms across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. These companies have received requests from the FTC for information concerning the effects of such pricing practices on privacy, competition, and consumer protection.
By leveraging data tools like AI, companies are engaging in a method known as “surveillance pricing” or “dynamic pricing.” This approach allows them to display varying prices to different consumers for the same products, depending on factors such as location, demographics, credit history, and browsing or shopping behaviors.
Many of the firms under scrutiny provide transaction, sales, and pricing services to some of the largest businesses in the U.S. and worldwide. For instance, Task is the transaction management provider for major hospitality brands like McDonald’s and Starbucks. Revionics specializes in retail price optimization software for international retailers, including Home Depot. Pros, a software enterprise known for its AI-driven pricing solutions, has clients like Nestlé, HP, and United Airlines, and acts as a technology partner for Microsoft.
The FTC aims to investigate the “opaque market” involved in categorizing consumers and setting targeted prices for products and services.
“Companies that collect personal data from Americans can endanger their privacy. There is a concern that these companies might exploit extensive personal information to charge higher prices,” stated FTC Chair Lina Khan. “Consumers have the right to understand whether their detailed data is being used for surveillance pricing, and the FTC’s examination will clarify this obscure pricing ecosystem.”
The FTC is seeking information on four critical areas: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales data, and the impact of these practices on the prices consumers ultimately pay.