The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their practices surrounding customer data usage, algorithms, and artificial intelligence in relation to individualized pricing strategies.
Eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received inquiries from the FTC seeking information on how these pricing strategies impact privacy, competition, and consumer protection.
These companies utilize data tools and a method known as “surveillance pricing,” or “dynamic pricing,” which enables them to present varying prices for the same products to different consumers based on their individual characteristics or behaviors. Factors considered can include location, demographics, credit history, and previous browsing or shopping behaviors.
Many of the firms under scrutiny provide transaction, sales, and pricing services to major corporations both in the U.S. and globally. For instance, Task is the transaction management provider for prominent hospitality brands like McDonald’s and Starbucks. Revionics supplies retail price optimization software to various international chains, including Home Depot. Pros, known for its AI-driven pricing solutions, serves clients like Nestlé, HP, and United Airlines and collaborates with Microsoft on technology development.
The FTC aims to explore this “opaque market” that categorizes consumers and sets targeted prices for products and services. FTC Chair Lina Khan remarked, “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 investigation will focus on four primary areas: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales information, and the effect of these practices on the prices consumers ultimately pay.