The Federal Trade Commission (FTC) has initiated an investigation into several major corporations regarding their use of customer data, algorithms, and artificial intelligence in setting individual pricing strategies.
On Tuesday, the regulatory agency issued information requests to eight companies: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC is examining the implications of these pricing strategies on privacy, competition, and consumer protection.
Companies are employing a method known as “surveillance pricing” or “dynamic pricing,” using data tools such as AI to present different prices for identical products based on factors like a consumer’s location, demographics, credit history, and shopping behavior.
Many of the firms under scrutiny provide transaction, sales, and pricing solutions to some of the largest companies in the U.S. and worldwide. Task Software manages transactions for major hospitality brands, including McDonald’s and Starbucks. Revionics offers retail price optimization software to key retailers like Home Depot, while Pros, known for its AI-driven pricing solutions, counts companies like Nestlé, HP, and United Airlines among its clients and collaborates with Microsoft on technology development.
The FTC aims to clarify the “opaque market” that profiles consumers and establishes targeted pricing. FTC Chair Lina Khan expressed concerns about the risks to privacy from firms that gather personal data, suggesting that these companies may leverage personal information to impose higher prices on consumers. She emphasized that Americans have the right to understand how detailed consumer data might be employed to implement surveillance pricing strategies.
The FTC is seeking details in four primary areas: the types of surveillance pricing services offered, data collection methods, customer and sales information, and the influence of these surveillance practices on consumer pricing.