The Federal Trade Commission (FTC) has initiated an investigation into a selection of prominent companies regarding their use of customer data, algorithms, and artificial intelligence to customize pricing.
On Tuesday, the regulatory agency issued requests for information to eight firms from various sectors—Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The inquiry aims to examine the implications of these pricing strategies on privacy, competition, and consumer protection.
These companies utilize data tools, including AI, to implement what is known as “surveillance pricing” or “dynamic pricing.” This practice allows them to present different prices to consumers for identical products based on various factors like location, demographics, credit history, and shopping behavior.
Several of the firms approached by the FTC offer transaction and pricing services to major U.S. and international corporations. Task Software manages transactions for significant hospitality names such as McDonald’s and Starbucks. Revionics supplies retail price optimization software and pricing analytics to global chains, including Home Depot. Pros, known for its AI-driven pricing solutions, lists Nestlé, HP, and United Airlines among its clients and collaborates with Microsoft on technology development.
The FTC is focused on unveiling the complexities of this “opaque market” characterized by shopper classification and targeted pricing strategies.
“Companies that collect personal data from Americans pose potential risks to privacy. Additionally, they might exploit this wealth of information to charge higher prices,” remarked FTC Chair Lina Khan. “Consumers deserve transparency regarding businesses that use detailed data for surveillance pricing, and the FTC’s investigation will clarify this obscure pricing model.”
The FTC is seeking information on four main aspects: the types of surveillance pricing products and services available, data collection methods, customer and sales information, and the overall effect of these practices on consumer pricing.