The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to customize pricing strategies.
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The FTC issued orders on Tuesday to eight companies across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency seeks to understand how these pricing practices affect privacy, competition, and consumer protection.
These companies utilize advanced data tools, including artificial intelligence, to engage in a practice known as “surveillance pricing,” or “dynamic pricing.” This method enables them to present varying prices for identical products based on individual consumer characteristics or behaviors, such as location, demographics, credit history, and online activity.
Many of the firms involved provide essential transaction, sales, and pricing services to some of the largest businesses in the United States and worldwide. For instance, Task Software is the transaction management partner for major hospitality brands like McDonald’s and Starbucks. Revionics supplies retail price optimization technologies to several global retailers, including Home Depot. Pros, recognized for its AI-driven pricing solutions, serves clients like Nestlé, HP, and United Airlines, and is also a technology development collaborator with Microsoft.
The FTC aims to investigate this “opaque market,” which categorizes consumers and assigns targeted pricing for goods and services.
“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,” stated FTC Chair Lina Khan. She emphasized that Americans need transparency about whether businesses are utilizing detailed consumer data for surveillance pricing, as the FTC’s inquiry attempts to illuminate this complex web of pricing intermediaries.
The FTC is focused on gathering insights in four main areas: the types of surveillance pricing products and services offered by each company, methods of data collection, customer and sales information, and the impact of these surveillance practices on the prices consumers pay.