The Federal Trade Commission (FTC) has initiated an investigation into several major corporations concerning their use of customer data, algorithms, and artificial intelligence to customize pricing for individual consumers.
Eight companies have received inquiries from the FTC, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The regulatory agency is seeking information regarding the implications of these pricing strategies on privacy, market competition, and consumer protection.
These companies employ data-driven tools, such as AI, to implement a strategy known as “surveillance pricing” or “dynamic pricing.” This practice allows businesses to present different prices for the same products based on various consumer characteristics and behaviors, including location, demographics, credit history, and online activity.
Many of the involved firms provide transaction, sales, and pricing services to some of the largest corporations in the U.S. and globally. Task Software manages transactions for major hospitality brands, including McDonald’s and Starbucks. Revionics offers retail price optimization and pricing analytics software to outlets like Home Depot. Pros, which claims to deliver AI-powered pricing solutions, serves clients such as Nestlé, HP, and United Airlines and is also a technology partner of Microsoft.
The FTC aims to clarify the “opaque market” that categorizes shoppers and establishes targeted pricing for goods and services. 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 FTC’s inquiry focuses on four main areas: the types of surveillance pricing services offered by each company, data collection methods, customer and sales data, and the influence of these pricing strategies on the final prices charged to consumers.