The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
On Tuesday, the FTC issued orders to eight firms from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The regulatory body seeks to gather information about the effects of these pricing practices on privacy, competition, and consumer protection.
Companies are engaging in a practice termed “surveillance pricing,” also known as “dynamic pricing,” which allows them to present differing prices for the same products based on individual consumer characteristics or behaviors. Factors influencing these differential prices can include location, demographics, credit history, and shopping patterns.
Many of the firms investigated by the FTC provide transaction, sales, and pricing services to major corporations both in the U.S. and internationally. Task Software is known for its role in managing transactions for significant hospitality brands, such as McDonald’s and Starbucks. Revionics offers retail price optimization software to major retailers like Home Depot. Meanwhile, Pros, described as a provider of AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clientele and collaborates with Microsoft on technology development.
The FTC aims to clarify this “opaque market” that profiles consumers and sets targeted prices for various goods and services. “Companies that collect extensive personal data from Americans risk invading people’s privacy. Now they may also be taking advantage of this wealth of information to impose higher prices on consumers,” stated FTC Chair Lina Khan. “Americans have the right to understand whether businesses are utilizing detailed consumer data for surveillance pricing, and the FTC’s investigation will illuminate this hidden pricing network.”
The agency is specifically seeking insights in four main areas: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales data, and the influence of these surveillance practices on the prices consumers ultimately pay.