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.
The inquiry involves eight firms spanning various industries—Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC has issued orders to these companies, seeking insights on how these pricing methods affect consumer privacy, competition, and protection.
These companies are known for their use of advanced data tools, engaging in a practice often referred to as “surveillance pricing” or “dynamic pricing,” which allows them to display varying prices for identical products based on consumer characteristics or behaviors. Factors influencing these prices may include geographical location, demographic information, credit history, and past shopping activities.
Many of the firms involved provide essential transaction, sales, and pricing services to some of the largest corporations in the U.S. and worldwide. For instance, Task Software manages transactions for major hospitality brands like McDonald’s and Starbucks, while Revionics offers pricing optimization solutions to retail giants, including Home Depot. Pros, recognized for its AI-driven pricing solutions, lists Nestlé, HP, and United Airlines among its clients and collaborates with Microsoft on technology development.
The FTC aims to clarify this “opaque market,” which involves categorizing consumers and setting specific prices for products and services based on that information.
FTC Chair Lina Khan stated, “Companies that gather personal data from Americans might jeopardize their privacy. Now, they could be capitalizing on this wealth of information to impose higher prices. Americans have the right to understand whether businesses are leveraging detailed consumer data to implement surveillance pricing, and the FTC’s investigation will uncover this hidden ecosystem of pricing intermediaries.”
The FTC’s investigation will focus on four primary areas: the types of surveillance pricing solutions offered by the companies, their methods of data collection, customer and sales data, and the impact of these practices on the final prices consumers are charged.