The Federal Trade Commission (FTC) has initiated an investigation into several major companies concerning their use of customer data, algorithms, and artificial intelligence to set personalized pricing.
The investigation involves eight firms: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC issued information requests to these companies, seeking insights on how these pricing strategies affect privacy, competition, and consumer protection.
These companies engage in a practice referred to as “surveillance pricing,” also known as “dynamic pricing,” which allows them to present varying prices to consumers for identical products based on attributes like location, demographics, credit scores, and online behaviors, such as browsing and purchasing history.
Many of the firms in question supply transaction and pricing services to major corporations domestically and internationally. For instance, Task Software manages transactions for well-known hospitality brands like McDonald’s and Starbucks, while Revionics offers analytics and software for price optimization to retail giants such as Home Depot. Additionally, Pros, known for its AI-driven pricing solutions, serves clients like Nestlé, HP, and United Airlines, and has partnered with Microsoft for technological development.
The FTC aims to clarify the operations within this “opaque market” where consumers are categorized, leading to targeted pricing strategies. FTC Chair Lina Khan emphasized 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. 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 specifically interested in four areas: the types of surveillance pricing services offered by each company, their data collection methods, customer and sales data, and the impact of these surveillance practices on the prices consumers ultimately pay.