The Federal Trade Commission (FTC) has initiated an investigation into several major corporations regarding their methods of utilizing customer data, algorithms, and artificial intelligence for personalized pricing strategies.
Eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received information requests from the FTC on Tuesday. The aim is to investigate the effects of these pricing tactics on privacy, competition, and consumer protection.
Companies are employing a technique referred to as “surveillance pricing,” or “dynamic pricing,” which allows them to present varying prices to different consumers for the same products based on their specific characteristics or behaviors, such as location, demographics, credit history, and browsing or shopping patterns.
Many of the firms targeted by the FTC supply transaction, sales, and pricing services to some of the largest businesses both 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 offers retail price optimization tools to global chains, including Home Depot. Pros, which specializes in AI-driven pricing solutions, serves clients like Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC aims to clarify this “opaque market,” which categorizes consumers and establishes targeted pricing for various products and services.
FTC Chair Lina Khan emphasized the potential risks to consumer privacy, 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 seeks information on four main aspects: the range of surveillance pricing products and services offered by each company; their data collection methods; customer and sales information; and the impact of these surveillance practices on the prices consumers are charged.