The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to implement personalized pricing strategies.
The inquiry involves eight firms from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC has issued requests for information about how these pricing strategies impact privacy, competition, and consumer protection.
Companies utilize data tools, often referred to as “surveillance pricing” or “dynamic pricing,” to offer varied prices for identical products based on individual consumer characteristics or behaviors. Factors such as location, demographics, credit history, and online shopping habits can influence these tailored prices.
Many of the companies under scrutiny provide transaction, sales, and pricing services to major U.S. and global firms. For instance, Task Software manages transactions for several leading hospitality brands, including McDonald’s and Starbucks. Revionics specializes in retail pricing optimization and analytics for notable chains, such as Home Depot. Pros, known for its AI-powered pricing solutions, serves clients like Nestlé, HP, and United Airlines and collaborates with Microsoft for technology development.
The FTC aims to explore this “opaque market,” which segments consumers and adjusts prices based on detailed data analysis. FTC Chair Lina Khan emphasized the potential risks to privacy and the need for transparency, stating, “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’s investigation is focused on four main areas: the types of surveillance pricing products and services each company offers; the methods of data collection; information regarding customers and sales; and the effects of these practices on the pricing consumers ultimately pay.