The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their utilization of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
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On Tuesday, the FTC issued information requests to eight firms: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency seeks to understand the effects of these pricing practices on consumer privacy, market competition, and consumer protection.
These companies employ data-driven strategies, such as “surveillance pricing” or “dynamic pricing,” which adjust prices based on individual consumer attributes and behaviors like location, demographics, credit history, and shopping activity.
Several of the targeted firms supply transaction, sales, and pricing services to major U.S. and international corporations. Task Software manages transactions for significant hospitality chains, including McDonald’s and Starbucks. Revionics develops retail price optimization and pricing analytics for global retailers such as Home Depot. Pros, which positions itself as a provider of AI-enhanced pricing solutions, serves well-known clients including Nestlé, HP, and United Airlines, and partners with Microsoft for technology development.
The FTC aims to clarify this “opaque market,” where consumers are categorized, and targeted pricing is implemented.
FTC Chair Lina Khan commented, “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 agency is focusing on four main areas: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales data, and how these practices affect the prices consumers ultimately pay.