The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to customize pricing for individual consumers.
On Tuesday, the FTC issued information requests to eight firms: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency is seeking details about how these pricing practices affect privacy, competition, and consumer protection.
Companies utilize tools like AI to apply what is known as “surveillance pricing” or “dynamic pricing,” presenting different prices to consumers based on various factors such as location, demographics, credit history, and browsing or shopping patterns.
Many of the companies under FTC scrutiny offer transaction, sales, and pricing services to some of the largest firms in the U.S. and worldwide. For instance, Task is involved in transaction management for major hospitality brands like McDonald’s and Starbucks, while Revionics supplies retail price optimization software to global chains, including Home Depot. Pros promotes itself as an AI solutions provider for pricing, catering to clients such as Nestlé, HP, and United Airlines and partnering with Microsoft for technology development.
The FTC aims to investigate the “opaque market” that categorizes consumers and sets specific prices for various products 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.”
Additionally, the FTC is collecting information in four main areas: the types of surveillance pricing products and services offered; methods of data collection; customer and sales information; and how these surveillance practices affect the prices consumers pay.