The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their practices involving customer data, algorithms, and artificial intelligence in relation to personalized pricing strategies.
On Tuesday, the FTC issued requests for information to eight companies spanning various industries, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency aims to examine the effects of these pricing strategies on privacy, competition, and consumer protection.
These companies utilize data-driven tools, such as artificial intelligence, to implement a method known as “surveillance pricing” or “dynamic pricing.” This practice allows them to present different prices for the same products to consumers based on factors like location, demographics, credit history, and online behavior.
Many of the investigated firms offer transaction, sales, and pricing solutions to some of the largest companies in the U.S. and worldwide. For instance, Task manages transactions for major hospitality brands, including McDonald’s and Starbucks. Revionics specializes in retail price optimization software, serving global retailers like Home Depot. Pros, which offers AI-enhanced pricing solutions, lists clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC is seeking to illuminate the opaque market that enables these companies to classify consumers and set targeted pricing for goods and services.
“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. She emphasized that Americans have the right to know whether businesses are utilizing detailed consumer data for surveillance pricing and that the FTC’s investigation will reveal the complexities of this pricing ecosystem.
The FTC’s inquiry focuses on four main areas: the types of surveillance pricing products and services each company offers, their data collection methods, customer and sales data, and the influence of these practices on consumer pricing.