The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their practices surrounding customer data, algorithms, and artificial intelligence in relation to personalized pricing strategies.
Companies including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros have received inquiries from the agency seeking to understand how these pricing practices affect privacy, competition, and consumer protection.
These companies utilize data tools and techniques, such as “surveillance pricing” or “dynamic pricing,” which allow them to present varying prices to different consumers for the same products based on factors like location, demographics, credit history, and online behavior.
Many firms targeted by the FTC provide transactional, sales, and pricing services to some of the largest companies in the United States and worldwide. Task Software is known for managing transactions for major hospitality brands like McDonald’s and Starbucks. Revionics offers retail price optimization software and pricing analytics to several international retailers, including Home Depot. Pros, which claims to provide AI-driven pricing solutions, serves clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft in technology development.
The FTC aims to investigate the complexities of this “opaque market” that categorizes shoppers and dictates targeted pricing strategies for various goods and services.
FTC Chair Lina Khan highlighted concerns over the potential exploitation of personal data for pricing purposes, 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 FTC is focusing on four main aspects: the types of surveillance pricing products and services offered by each company; their data collection methods; customer and sales information; and the impact of these surveillance practices on the prices consumers pay.