The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
The inquiry encompasses eight companies: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. These firms have been ordered to provide details about how their pricing practices affect privacy, competition, and consumer protection.
These companies utilize data-driven tools, frequently referred to as “surveillance pricing” or “dynamic pricing,” to display varying prices for identical products based on individual consumer characteristics or behaviors, including factors such as location, demographics, credit history, and online buying habits.
Many of these firms offer transaction, sales, and pricing services to some of the largest companies both in the U.S. and internationally. Task Software manages transactions for prominent hospitality brands like McDonald’s and Starbucks, while Revionics specializes in retail price optimization and analytics for major chains, including Home Depot. Pros, known for its AI-driven pricing solutions, serves clients such as Nestlé, HP, and United Airlines, and partners with Microsoft for tech development.
The FTC aims to clarify the practices in this “opaque market” where consumers are categorized and targeted with specific prices for various goods and services.
FTC Chair Lina Khan emphasized the risks associated with the exploitation of personal data, stating, “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 is seeking information on four main aspects: the types of surveillance pricing products offered, data collection methods, customer and sales data, and the impact of these practices on the final prices consumers pay.