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.
The FTC issued orders to eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking information about how these pricing tactics affect privacy, competition, and consumer rights.
These companies utilize advanced data tools, such as AI, to implement a strategy known as “surveillance pricing” or “dynamic pricing,” which allows them to display varying prices for identical products based on consumer-specific factors, including location, demographics, credit history, and browsing or shopping behaviors.
Many of the businesses involved in the investigation offer transaction, sales, and pricing solutions to some of the largest corporations both in the U.S. and internationally. Task Software supports numerous major hospitality firms, including McDonald’s and Starbucks. Revionics provides retail pricing optimization software and analytics to various global retailers, including Home Depot. Pros, a technology company known for its AI-driven pricing solutions, lists clients such as Nestlé, HP, and United Airlines and has partnered with Microsoft for technology development.
The FTC aims to clarify the “opaque market” that allows for shopper categorization and the establishment of targeted pricing for various products and services.
FTC Chair Lina Khan emphasized the potential risks to privacy linked to companies collecting extensive personal data, stating, “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.”
The agency is particularly interested in four main areas: the types of surveillance pricing solutions offered by each company, their methods of data collection, customer and sales data, and the impact of these practices on the prices consumers ultimately pay.