The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their usage of customer data, algorithms, and artificial intelligence to implement individualized pricing strategies.
On Tuesday, the FTC issued orders to eight firms across various industries, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking information about how these pricing practices impact privacy, competition, and consumer protection.
These companies employ methods known as “surveillance pricing” or “dynamic pricing,” which allow them to present different prices to consumers for identical products based on characteristics such as location, demographics, credit history, and online behavior.
Several of the firms targeted by the FTC are providers of transaction, sales, and pricing services for some of the largest businesses in the United States and worldwide. Task is the transaction management company used by major hospitality brands, including McDonald’s and Starbucks. Revionics offers retail price optimization software and pricing analytics to global chains like Home Depot. Pros, a software firm that promotes its AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clients, and is also a technology development partner for Microsoft.
The FTC aims to investigate this “opaque market” that categorizes consumers and establishes targeted pricing for products and services.
“Companies that collect Americans’ personal data may jeopardize people’s privacy. Now, these firms could be taking advantage of extensive personal information to impose higher prices,” FTC Chair Lina Khan stated. “Americans need to understand if businesses are using detailed consumer data for surveillance pricing, and the FTC’s inquiry will illuminate this obscure pricing system.”
The FTC is specifically looking for information in four areas: the types of surveillance pricing products and services offered by each company, data collection methods, customer and sales data, and how these surveillance practices affect the prices consumers ultimately pay.