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.
On Tuesday, the FTC issued orders to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking insights into how such pricing methods affect privacy, competition, and consumer protection.
These companies engage in what is referred to as “surveillance pricing” or “dynamic pricing,” which involves presenting different prices to consumers based on their characteristics or behaviors, such as location, demographics, credit history, and online activity.
Many of the firms approached by the FTC play crucial roles in providing transaction, sales, and pricing services to major corporations both in the U.S. and internationally. Task Software is a transaction management provider for notable hospitality giants like McDonald’s and Starbucks. Revionics offers retail price optimization and analytics solutions to several well-known retailers, including Home Depot. Pros, which markets itself as an AI-powered pricing solutions provider, serves clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC aims to clarify the workings of this “opaque market” that classifies consumers and sets targeted prices for various products and services.
“Businesses that gather personal data from Americans can jeopardize individual privacy. There is a possibility that these companies are utilizing this extensive amount of personal information to impose higher prices,” stated FTC Chair Lina Khan. “Americans have the right to know whether companies are leveraging detailed consumer data for surveillance pricing, and this inquiry will provide insight into this hidden network of pricing intermediaries.”
The FTC is specifically seeking information in four critical areas: the types of surveillance pricing products and services each company provides, their data collection methods, customer and sales data, and the impact of these surveillance techniques on the prices consumers ultimately pay.