The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence to customize pricing for individual consumers.
Eight firms from various industries, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received orders from the FTC on Tuesday. The agency is seeking information on the implications of these pricing practices on privacy, competition, and consumer protection.
Companies often use data tools, such as AI, to implement “surveillance pricing” or “dynamic pricing,” showing different prices for the same products based on consumer characteristics or behaviors. Factors influencing these prices can include location, demographics, credit history, and browsing or shopping history.
Many of the companies contacted by the FTC supply transaction, sales, and pricing services to prominent firms both in the U.S. and internationally. Task Software manages transactions for major hospitality brands like McDonald’s and Starbucks. Revionics specializes in retail price optimization and pricing analytics for global chains like Home Depot. Pros, a software company that offers AI-powered solutions for pricing, lists Nestlé, HP, and United Airlines among its clients and collaborates with Microsoft as a technology development partner.
The FTC aims to understand this “opaque market” that segments shoppers and assigns targeted prices for products and services.
“Companies that harvest Americans’ personal data can jeopardize personal privacy. They might be using this vast amount of personal information to charge people higher prices,” stated FTC Chair Lina Khan. “Americans deserve to know whether businesses are utilizing detailed consumer data to practice surveillance pricing, and the FTC’s investigation will illuminate this shadowy ecosystem of pricing intermediaries.”
The FTC is focused on gathering information in four key areas: the types of surveillance pricing products and services each firm provides; their methods of data collection; customer and sales information; and the impact of these surveillance practices on the prices consumers pay.