The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their utilization of customer data, algorithms, and artificial intelligence to customize pricing for individual consumers.
On Tuesday, the FTC issued information requests to eight firms spanning various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. This inquiry aims to assess the implications of these pricing strategies on privacy, competition, and consumer protection.
These companies employ data-driven techniques, known as “surveillance pricing” or “dynamic pricing,” which enable them to present different prices to consumers for identical products based on personal attributes or behaviors. Factors influencing these pricing strategies may include a consumer’s location, demographics, credit history, and previous shopping habits.
Many companies under scrutiny provide transaction, sales, and pricing services to major U.S. and global corporations. Notably, Task Software manages transactions for well-known hospitality brands such as McDonald’s and Starbucks. Revionics specializes in retail pricing optimization and provides pricing analytics to several large chains, including Home Depot. Pros, which claims to offer AI-powered pricing solutions, serves clients such as Nestlé, HP, and United Airlines and partners with Microsoft in technology development.
The FTC is seeking to clarify what it describes as an “opaque market” that classifies consumers and adjusts prices for goods and services accordingly.
“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 agency is focusing on four main areas of concern: the types of surveillance pricing products and services offered by each company, their data collection methods, information related to customers and sales, and the effect these surveillance practices have on consumer pricing.