The Federal Trade Commission (FTC) has initiated an investigation into several major corporations regarding their use of customer data, algorithms, and artificial intelligence to create personalized pricing strategies.
Eight companies from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received requests from the agency on Tuesday for details about how these pricing practices affect privacy, competition, and consumer protection.
Utilizing data-driven tools like AI, companies implement what is known as “surveillance pricing” or “dynamic pricing,” which allows them to display different prices for the same products based on individual consumer characteristics or behaviors. These factors may include location, demographics, credit history, and online shopping habits.
Many of the firms targeted by the FTC supply transaction, sales, and pricing services to some of the largest businesses in the U.S. and worldwide. Task Software, for instance, is the transaction management firm supporting major hospitality brands, including McDonald’s and Starbucks. Revionics specializes in retail price optimization and provides pricing analytics services to numerous global retailers such as Home Depot. Pros, which offers AI-driven pricing solutions, counts well-known names like Nestlé, HP, and United Airlines among its clients. It also collaborates with Microsoft as a technology development partner.
The FTC aims to investigate this “opaque market” that profiles consumers and establishes tailored pricing for goods and services.
“Companies that collect personal data from Americans may jeopardize people’s privacy. These firms could be exploiting this extensive personal information to impose higher prices,” said FTC Chair Lina Khan. “Americans should be informed whether businesses are leveraging detailed consumer data to apply surveillance pricing, and the FTC’s investigation will clarify this clouded environment of pricing intermediaries.”
The FTC is seeking information in four primary areas: the types of surveillance pricing products and services offered by each company, data collection methods, customer and sales information, and the impact of these surveillance practices on the prices consumers ultimately pay.