The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence to tailor pricing on an individual basis.
The firms under scrutiny include Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC issued orders to these companies on Tuesday, seeking insights into how their pricing strategies impact privacy, competition, and consumer protection.
These companies utilize data tools in a practice termed “surveillance pricing” or “dynamic pricing,” which allows them to present varying prices for the same products based on consumer characteristics or behaviors such as location, demographics, credit history, and online activity.
Many of the contacted firms are involved in providing transaction, sales, and pricing services to some of the largest companies in the United States and beyond. Task Software supports major hospitality brands like McDonald’s and Starbucks, while Revionics offers retail price optimization software to numerous global retailers, including Home Depot. Pros, a company that specializes in AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clients and collaborates with Microsoft on technology development.
The FTC aims to clarify the complexities of this “opaque market,” in which consumers are categorized and charged targeted 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.”
The FTC’s investigation will focus on four main areas: the types of surveillance pricing products and services offered by each company; the methods of data collection; customer and sales data; and the influence of these surveillance practices on the prices consumers ultimately pay.