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.
The inquiry targets eight firms: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. These companies have been ordered to provide information to the FTC on how these pricing tactics affect privacy, competition, and consumer protection.
Companies leverage data tools, including AI, to implement a strategy known as “surveillance pricing” or “dynamic pricing,” which allows them to display varying prices for the same products depending on individual consumer characteristics or behaviors. Factors considered can include the buyer’s location, demographics, credit history, and browsing or shopping history.
The firms involved in the FTC’s inquiry offer transaction, sales, and pricing solutions to many leading businesses across the U.S. and worldwide. Task Software supports significant hospitality chains such as McDonald’s and Starbucks, while Revionics supplies retail price optimization and pricing analytics services to global retailers like Home Depot. Pros, a software company emphasizing AI-driven pricing solutions, has clients including Nestlé, HP, and United Airlines, and collaborates with Microsoft on tech development.
The FTC aims to explore this “opaque market” that profiles consumers and assigns targeted prices to goods and services. FTC Chair Lina Khan remarked that businesses managing Americans’ personal data pose privacy risks and may exploit this information to implement higher pricing strategies. “Americans deserve to know whether businesses are using detailed consumer data to enforce surveillance pricing, and the FTC’s inquiry will illuminate this opaque network of pricing middlemen,” she stated.
The commission is particularly interested in four aspects: the types of surveillance pricing products and services offered by each company, the methods of data collection, customer and sales information, and the impact of these practices on the final prices that consumers pay.