The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their methods of utilizing customer data, algorithms, and artificial intelligence for personalized pricing strategies.
Eight companies across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received inquiries from the FTC on Tuesday. The agency is seeking information on how these pricing practices affect privacy, competition, and consumer protection.
The companies involved employ a practice known as “surveillance pricing” or “dynamic pricing,” which allows them to display varying prices for identical products based on specific consumer characteristics or behaviors. These factors can include a shopper’s location, demographics, credit history, and both browsing and shopping habits.
Many of the firms contacted by the FTC offer transaction, sales, and pricing services to major businesses in the U.S. and worldwide. Task Software manages transactions for several leading hospitality brands, including McDonald’s and Starbucks. Revionics specializes in retail price optimization software used by global retailers like Home Depot. Pros, known for its AI-driven pricing solutions, serves clients such as Nestlé, HP, and United Airlines and collaborates with Microsoft on technology development.
The FTC aims to clarify this “opaque market” where consumers are categorized, leading to targeted pricing of goods and services. 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 agency is focusing on four main areas of interest: the types of surveillance pricing products and services offered by each company; the data collection processes; customer and sales data; and how these surveillance practices ultimately influence the prices paid by customers.