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.
Eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have been ordered by the FTC to provide information about how these practices might affect privacy, competition, and consumer protection.
These companies engage in a pricing method known as “surveillance pricing” or “dynamic pricing,” which involves displaying different prices for the same products to various consumers based on their specific characteristics or behaviors. Factors such as location, demographics, credit history, and online shopping habits play a significant role in the pricing strategy.
Many companies under investigation provide transaction, sales, and pricing services to major corporations both in the U.S. and globally. Task Software manages transactions for several hospitality giants, including McDonald’s and Starbucks, while Revionics offers retail price optimization solutions to various international chains like Home Depot. Pros, specializing in AI-driven pricing solutions, has clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC aims to clarify the “opaque market” characterized by shopper categorization and targeted pricing methods.
“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. “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 focusing on four primary areas for information: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales information, and the impact of these surveillance tactics on the prices customers pay.