The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
The inquiry involves eight firms spanning various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC issued orders to these companies on Tuesday, seeking insights into how these pricing methods affect privacy, competition, and consumer protection.
These companies utilize data tools, such as AI, to implement a strategy known as “surveillance pricing” or “dynamic pricing.” This approach allows them to present different prices to consumers for identical products based on individual characteristics or behaviors, including location, demographics, credit history, and browsing or shopping history.
Many of the firms under investigation offer transaction, sales, and pricing services to some of the largest companies in the U.S. and worldwide. For instance, Task Software supports transaction management for prominent hospitality brands like McDonald’s and Starbucks. Revionics supplies retail price optimization software and pricing analytics services to global chains, including Home Depot. Pros, known for its AI-driven pricing solutions, has clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft for technology development.
The FTC aims to clarify the workings of this “opaque market” that categorizes consumers and assigns targeted prices for products 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,” FTC Chair Lina Khan stated. “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 specifically seeking information on four main areas: the types of surveillance pricing products and services each company provides, data collection methods, customer and sales information, and how these surveillance practices affect the prices that consumers pay.