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 individual consumers.
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The FTC has reached out to eight companies from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, requesting detailed information about how their pricing strategies affect privacy, competition, and consumer protection.
These firms employ a technique known as “surveillance pricing” or “dynamic pricing,” where they display different prices for the same products based on consumer attributes such as location, demographics, credit history, and browsing or shopping behavior.
Many of the firms under scrutiny provide transaction, sales, and pricing services to major businesses both in the U.S. and internationally. Task, for example, manages transactions for significant hospitality chains like McDonald’s and Starbucks, while Revionics offers pricing optimization software used by global retailers, including Home Depot. Pros, which claims to deliver AI-powered pricing solutions, serves notable clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft as a technology partner.
The FTC aims to clarify the complexities of this “opaque market” that distinguishes consumers based on various data points to set targeted prices.
FTC Chair Lina Khan stated, “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 FTC is seeking information 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.