The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to personalize pricing strategies.
The inquiry specifically targets eight companies from various sectors: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC is seeking to understand how these pricing practices affect privacy, competition, and consumer protection.
These companies utilize data tools such as AI for a practice known as “surveillance pricing,” also referred to as “dynamic pricing.” This approach allows them to display different prices for the same products to consumers based on individual characteristics or behaviors, which may include location, demographics, credit history, and online shopping habits.
Many of the firms involved offer transaction and pricing services to some of the largest companies in the U.S. and around the world. Notably, Task Software manages transactions for major hospitality brands like McDonald’s and Starbucks, while Revionics supports retail price optimization for chains such as Home Depot. Pros, which specializes in AI-driven pricing solutions, serves clients including Nestlé, HP, and United Airlines and is a technology partner of Microsoft.
The FTC aims to clarify the complexities within this “opaque market” that categorizes consumers and engages in targeted pricing strategies.
FTC Chair Lina Khan emphasized the potential risks to consumer privacy, stating, “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 agency is focusing on four main areas of investigation: the types of surveillance pricing products and services offered, the methods of data collection, customer and sales information, and the impact of these surveillance pricing practices on consumer pricing.