The Federal Trade Commission (FTC) has initiated an investigation into several major companies concerning their use of customer data, algorithms, and artificial intelligence to customize pricing on an individual basis.
Eight companies across various industries, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received orders from the FTC on Tuesday. The agency seeks information on how this pricing practice affects privacy, competition, and consumer protection.
Using data tools such as AI, companies employ a method known as “surveillance pricing” or “dynamic pricing” to display different prices to consumers for the same products based on their characteristics or behaviors. These characteristics can include location, demographics, credit history, and browsing or shopping history.
Many of the companies contacted by the FTC provide transaction, sales, and pricing services to some of the largest firms in the U.S. and worldwide. Task manages transactions for major hospitality companies including McDonald’s and Starbucks. Revionics offers retail price optimization software and pricing analytics to global chains like Home Depot. Pros, a software firm promoting itself as a provider of AI-powered pricing solutions, serves clients such as Nestlé, HP, and United Airlines, and is a technology development partner of Microsoft.
The FTC aims to unravel this “opaque market” that categorizes consumers and sets targeted prices for products 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,” said FTC Chair Lina Khan in a statement. “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 is seeking information in four key areas: the types of surveillance pricing products and services each company offers; how they collect data; customer and sales information; and how these surveillance practices affect the final prices consumers pay.