The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
The agency has issued orders to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking information on how these pricing practices might impact privacy, competition, and consumer protection.
Companies are utilizing advanced data tools, such as AI, in a practice referred to as “surveillance pricing” or “dynamic pricing,” which allows them to present varying prices to different consumers based on factors like location, demographic data, credit history, and browsing or shopping habits.
Many of the firms that have been approached by the FTC offer transaction, sales, and pricing solutions to some of the largest organizations in the U.S. and around the world. For instance, Task Software is known for its transaction management services for major hospitality brands like McDonald’s and Starbucks. Revionics specializes in retail price optimization and analytics for global retailers, including Home Depot. Pros, which focuses on AI-powered pricing solutions, serves clients such as Nestlé, HP, and United Airlines, and has a technology partnership with Microsoft.
The FTC aims to clarify the “opaque market” where companies categorize shoppers and set targeted prices for various goods and services.
“Firms that harvest Americans’ personal data can put individuals’ privacy at risk. Now firms could be exploiting this vast trove of personal information to charge higher prices,” FTC Chair Lina Khan stated. “Americans deserve transparency regarding whether businesses are using intricate consumer data for surveillance pricing, and the FTC’s inquiry will illuminate this shadowy ecosystem of pricing middlemen.”
The FTC is focusing on four main areas of inquiry: the types of surveillance pricing products and services each company offers, their data collection methods, customer and sales information, and the impact of these practices on consumer pricing.