The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of consumer data, algorithms, and artificial intelligence for personalized pricing strategies.
Eight companies involved include Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC issued information requests to these firms on Tuesday, wanting to understand how their pricing practices affect privacy, competition, and consumer protection.
These companies utilize data tools in a process referred to as “surveillance pricing” or “dynamic pricing,” which involves displaying different prices to consumers for identical products based on various factors such as location, demographics, credit history, and online shopping behavior.
Many of the businesses targeted by the FTC are providers of transaction, sales, and pricing services for major corporations in the U.S. and worldwide. Task Software is known for managing transactions for well-known hospitality brands like McDonald’s and Starbucks. Revionics offers retail price optimization and pricing analytics to global retailers, including Home Depot. Pros, a company specializing in AI-driven pricing solutions, serves clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft in technology development.
The FTC aims to explore the “opaque market” that profiles consumers to set targeted prices for various goods and services.
“Companies that collect personal data from Americans may jeopardize their privacy. It is possible that these companies are using extensive personal information to impose higher prices,” remarked FTC Chair Lina Khan. “Consumers have the right to know if businesses are leveraging detailed consumer data for surveillance pricing, and this inquiry will help illuminate the obscure market of pricing intermediaries.”
The FTC is seeking insights into four main aspects: the types of surveillance pricing products and services offered by each organization; methods of data collection; information regarding customers and sales; and how these surveillance practices affect the prices consumers ultimately pay.