The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to customize pricing for individual consumers.
On Tuesday, the agency issued information requests to eight firms spanning various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC aims to explore how these pricing strategies affect privacy, competition, and consumer protection.
Many companies are utilizing advanced data tools, such as AI, to implement a practice termed “surveillance pricing,” also referred to as “dynamic pricing.” This approach allows businesses to present different prices for identical products to different consumers based on factors such as their location, demographics, credit history, and online behavior.
Among the companies targeted by the FTC, Task Software manages transactions for major hospitality brands like McDonald’s and Starbucks. Revionics specializes in retail price optimization and analytics for global chains, including Home Depot. Pros, which markets itself as an AI-powered pricing solutions provider, serves clients such as Nestlé, HP, and United Airlines, and also collaborates with Microsoft.
The FTC’s investigation seeks to clarify the complexities surrounding what it defines as an “opaque market” where shoppers are categorized and faced with varied pricing for products and services.
FTC Chair Lina Khan emphasized the potential risks to consumer privacy, 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 agency is particularly interested in four main areas: the types of surveillance pricing 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.