The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to tailor pricing for individual consumers.
The inquiry affects eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC has issued requests for information, focusing on how these pricing strategies affect privacy, competition, and consumer protection.
Companies utilize data-driven methods, such as artificial intelligence, in a practice known as “surveillance pricing” or “dynamic pricing.” This approach allows them to present varying prices to consumers for identical products based on factors like location, demographics, credit history, and online behavior.
Many of the firms under scrutiny provide transaction, sales, and pricing services to major corporations in the U.S. and around the world. Notably, Task Software is linked to significant hospitality brands, including McDonald’s and Starbucks, while Revionics supplies retail price optimization tools to several global retailers, including Home Depot. Pros emphasizes its AI-powered pricing solutions and counts Nestlé, HP, and United Airlines among its clientele and partners with Microsoft.
The FTC aims to investigate this “opaque market,” which categorizes consumers and sets targeted pricing based on their profiles. 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 is specifically seeking information on four aspects: the types of surveillance pricing products and services offered by each firm; the methods of data collection; customer and sales data; and the impact of these practices on the prices customers ultimately pay.