The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their usage of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
Eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received information requests from the FTC aimed at assessing the implications of these pricing practices on privacy, competition, and consumer protection.
These companies utilize data-driven methods, including artificial intelligence, to implement what is referred to as “surveillance pricing” or “dynamic pricing.” This approach allows businesses to present varying prices for the same products based on individual customer characteristics and behaviors such as location, demographics, credit history, and browsing or purchasing history.
Notably, many of the firms involved in the investigation provide transaction, sales, and pricing services to large corporations both in the United States and worldwide. Task Software manages transactions for major hospitality brands like McDonald’s and Starbucks. Revionics offers retail price optimization software and analytics to several global retailers, including Home Depot. Pros similarly focuses on AI-based pricing solutions, serving clients like Nestlé, HP, and United Airlines, and partners with Microsoft for technology development.
The FTC aims to unravel the complexities of this “opaque market” that profiles shoppers to set targeted prices for various products and services.
FTC Chair Lina Khan expressed concerns about 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.” She emphasized the need for transparency in how detailed consumer data may be used for surveillance pricing.
The FTC’s inquiry will focus on four main areas: the types of surveillance pricing products and services offered by each company, methods of data collection, customer and sales information, and how these practices affect the pricing consumers face.