The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their usage of customer data, algorithms, and artificial intelligence to create personalized pricing structures.
The inquiry involves eight firms from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. These companies have been directed by the FTC to provide details on how their pricing strategies affect privacy, competition, and consumer protection.
Companies utilize data-driven tools, including artificial intelligence, in a practice known as “surveillance pricing” or “dynamic pricing.” This approach allows businesses to offer varying prices for the same products based on characteristics like location, demographics, credit history, and online shopping behaviors.
Many of the firms contacted by the FTC supply transaction, sales, and pricing services to some of the largest companies in the U.S. and worldwide. Task Software manages transactions for major hospitality brands, including McDonald’s and Starbucks, while Revionics offers retail price optimization solutions to global chains like Home Depot. Pros, an AI-driven software company, has clients including Nestlé, HP, and United Airlines and collaborates with Microsoft on technology development.
The FTC aims to clarify the complexities of a pricing market that categorizes consumers and establishes targeted pricing strategies.
“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,” stated FTC Chair Lina Khan. “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 seeks information in four primary areas: the types of surveillance pricing services offered, methods of data collection, customer and sales information, and the impact of these practices on consumer pricing.