The Federal Trade Commission (FTC) has initiated an investigation into several major corporations regarding their use of customer data, algorithms, and artificial intelligence to implement individualized pricing strategies.
On Tuesday, the regulatory agency issued information requests to eight companies across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The inquiry focuses on the implications of these pricing practices for privacy, competition, and consumer protection.
Companies use advanced data tools, such as AI, to deploy a technique known as “surveillance pricing” or “dynamic pricing,” where different prices are presented to different consumers based on a variety of factors including location, demographics, credit history, and browsing or shopping habits.
Among the firms under scrutiny, Task Software manages transactions for major hospitality brands, including McDonald’s and Starbucks, while Revionics specializes in retail price optimization for companies like Home Depot. Pros, which markets itself as a provider of AI-driven pricing solutions, boasts clients such as Nestlé, HP, and United Airlines, and partners with Microsoft for technology development.
The FTC aims to uncover further details about the “opaque market” that allows companies to categorize shoppers and set targeted prices for their offerings.
FTC Chair Lina Khan commented, “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.”
As part of the investigation, the FTC is seeking information on four main areas: the types of surveillance pricing products and services each company provides; the data collection methods in use; customer and sales data; and the ways in which these surveillance practices affect the final prices that consumers pay.