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 investigation has targeted eight companies across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. These firms have been ordered to provide information about how their pricing tactics impact consumer privacy, competition, and protection.
These companies utilize data-driven tools, such as AI, to implement what is known as “surveillance pricing” or “dynamic pricing,” which allows them to display different prices for the same products based on individual consumer characteristics or behaviors. Factors influencing these varying prices may include a consumer’s location, demographics, credit history, and browsing or shopping patterns.
Many of the firms involved in the FTC’s investigation provide transaction, sales, and pricing services to some of the largest corporations in the U.S. and internationally. For instance, Task Software supports major hospitality clients like McDonald’s and Starbucks. Revionics offers retail price optimization software and pricing analysis to global chains, including Home Depot. Pros markets itself as a developer of AI-driven pricing solutions and counts brands like Nestlé, HP, and United Airlines among its clients. Additionally, it collaborates with Microsoft as a technology partner.
The FTC aims to clarify the “opaque market” that categorizes consumers and determines targeted prices for products and services.
“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,” stated FTC Chair Lina Khan. “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 is specifically seeking information in four main areas: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales information, and the influence of these surveillance practices on the final prices charged to consumers.