The Federal Trade Commission (FTC) has initiated an investigation into several major corporations regarding their use of customer data, algorithms, and artificial intelligence to customize pricing for individual consumers.
On Tuesday, the regulatory agency issued orders to eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking information on how these practices affect privacy, competition, and consumer protection.
These companies are known to utilize data tools for a practice referred to as “surveillance pricing” or “dynamic pricing,” which involves displaying different prices to consumers for the same products based on various factors such as location, demographics, credit history, and browsing or shopping history.
Many of the firms targeted by the FTC offer transaction, sales, and pricing services to some of the largest companies in the U.S. and worldwide. For instance, Task Software is known for its work with notable hospitality brands like McDonald’s and Starbucks. Revionics specializes in retail price optimization software and pricing analytics for numerous global retailers, including Home Depot. Pros, a company that promotes itself as a provider of AI-driven pricing solutions, serves clients like Nestlé, HP, and United Airlines, and is also a technology partner of Microsoft.
The FTC aims to uncover details about this “opaque market” that categorizes consumers and assigns 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 is seeking information in four main areas: the types of surveillance pricing products and services offered by each company, their methods of data collection, customer and sales information, and the impact of these surveillance practices on consumer pricing.