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 FTC has issued information requests to eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency is examining how these pricing practices may affect privacy, competition, and consumer protection.
Utilizing data tools such as AI, these companies engage in a practice referred to as “surveillance pricing” or “dynamic pricing,” which allows them to present different prices to consumers for identical products based on specific characteristics or behaviors. Factors influencing these pricing variations can encompass location, demographics, credit history, and browsing or shopping habits.
Many of the entities contacted provide transaction, sales, and pricing services to some of the largest firms in the U.S. and worldwide. For instance, Task Software is involved in transaction management for major hospitality brands like McDonald’s and Starbucks. Revionics specializes in retail price optimization software and pricing analytics for global retailers, including Home Depot. Pros, a provider of AI-driven pricing solutions, serves clients such as Nestlé, HP, and United Airlines and collaborates with Microsoft on technology development.
The FTC aims to investigate this “opaque market” that categorizes consumers and establishes pricing targeted at them. 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.”
As part of the investigation, the FTC is seeking information on four primary areas: the types of surveillance pricing products and services offered by each company, data collection methods, customer and sales information, and the impact of these surveillance practices on the prices customers ultimately pay.