The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to implement personalized pricing strategies.
The investigation has targeted eight firms from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, which received requests for information aimed at understanding how these pricing strategies affect privacy, competition, and consumer protection.
Companies use data-driven tools, such as AI, in a practice referred to as “surveillance pricing,” or “dynamic pricing,” which allows them to display different prices for the same products to various consumers based on individual characteristics or behaviors. Factors such as location, demographics, credit history, and online activity can influence these tailored prices.
Many of the companies being investigated provide transaction, sales, and pricing services to major domestic and international businesses. Task Software manages transactions for key hospitality entities, including McDonald’s and Starbucks. Revionics offers pricing optimization and analytics software to global brands like Home Depot. Pros, recognized for its AI-driven pricing solutions, serves notable clients such as Nestlé, HP, and United Airlines, and also collaborates with Microsoft on technology development.
The FTC aims to scrutinize this “opaque market” where consumer categorization leads to targeted pricing. FTC Chair Lina Khan highlighted concerns over privacy violations due to the exploitation of personal data for potentially inflated pricing. She emphasized the need for transparency regarding businesses’ use of detailed consumer data in their pricing strategies, asserting that the investigation will provide insight into this complex network of pricing intermediaries.
The commission is seeking information on four main topics: the types of surveillance pricing products each company provides, their data collection methods, relevant customer and sales information, and the ways these surveillance practices affect the prices customers pay.