The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
The inquiry specifically targets eight companies: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC issued letters to these firms, seeking information about the implications of their pricing tactics on privacy, competition, and consumer protection.
These companies are known for utilizing advanced data tools, including AI, to engage in practices labeled as “surveillance pricing” or “dynamic pricing.” This approach allows them to present varying prices for the same products to different consumers based on a range of criteria such as geographical location, demographics, credit history, and online shopping habits.
Notably, some of the firms being investigated play pivotal roles in the transaction and pricing services sector for major corporations both in the U.S. and globally. Task Software, for instance, manages transactions for significant hospitality chains like McDonald’s and Starbucks. Revionics specializes in retail price optimization software used by major retailers, including Home Depot. Pros, which offers AI-driven pricing solutions, counts renowned brands like Nestlé, HP, and United Airlines among its clientele and is also a technology partner of Microsoft.
The FTC aims to uncover the details of this “opaque market” that profiles shoppers and implements targeted pricing for various products 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 commission is focusing on four primary areas of concern: the types of surveillance pricing products and services offered by each company, methods of data collection, customer and sales information, and how these practices influence the final prices customers pay.