The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to create personalized pricing strategies.
The regulatory agency has issued orders to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking information about how these pricing practices may affect privacy, competition, and consumer protection.
These companies utilize data tools, such as AI, to implement a practice known as “surveillance pricing” or “dynamic pricing,” which allows them to display varying prices for the same products based on individual consumer characteristics or behaviors. These factors can include a customer’s location, demographics, credit history, and shopping habits.
Many of the companies under investigation are involved in providing transaction, sales, and pricing services to some of the largest firms both in the U.S. and internationally. For instance, Task is associated with major hospitality brands like McDonald’s and Starbucks, while Revionics offers retail price optimization and pricing analytics to chains such as Home Depot. Pros, which specializes in AI-powered pricing solutions, serves clients like Nestlé, HP, and United Airlines and collaborates with Microsoft on technology development.
The FTC aims to delve into what it describes as an “opaque market” in which shoppers are categorized and charged targeted prices for products and services.
FTC Chair Lina Khan emphasized the agency’s concerns, stating, “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. 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’s investigation focuses on four main areas: the types of surveillance pricing products and services each company offers, their data collection methods, customer and sales information, and how these surveillance practices affect the prices consumers pay.