The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their practices of utilizing customer data, algorithms, and artificial intelligence to implement personalized pricing strategies.
The inquiry involves eight firms from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC has issued orders to these companies, seeking detailed information about the implications of their pricing practices on consumer privacy, competition, and protection.
These companies employ tools such as AI to practice “surveillance pricing” or “dynamic pricing,” which allows them to present different prices for the same products to consumers based on factors like location, demographic data, credit scores, and shopping behavior.
Several of the firms being investigated are significant players in transaction, sales, and pricing services for many leading companies in the U.S. and worldwide. Task Software manages transactions for major hospitality brands, such as McDonald’s and Starbucks. Revionics specializes in retail price optimization and analytics, catering to large chains like Home Depot. Pros is recognized for its AI-driven pricing solutions and counts Nestlé, HP, and United Airlines among its clients, and it also acts as a technology partner for Microsoft.
The FTC aims to clarify the complexities of this “opaque market” that categorizes consumers and applies tailored pricing.
FTC Chair Lina Khan stated, “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 inquiry focuses on four primary areas: the types of surveillance pricing products and services offered by the companies, their data collection methods, customer and sales information, and the influence of these practices on the prices consumers pay.