The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their practices related to customer data usage, algorithms, and artificial intelligence for personalized pricing strategies.
Eight companies spanning various industries—including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros—received inquiries from the agency on Tuesday. The FTC is seeking insights into how these pricing practices affect privacy, competition, and consumer protection.
These companies utilize tools, including artificial intelligence, to implement a method known as “surveillance pricing,” also referred to as “dynamic pricing.” This approach allows businesses to present varied prices for the same products based on individual consumer traits or behaviors, which may include factors such as location, demographics, credit history, and online shopping history.
The firms contacted by the FTC are vital in providing transaction, sales, and pricing services to numerous major corporations, both in the U.S. and worldwide. For instance, Task Software manages transactions for significant hospitality brands like McDonald’s and Starbucks, while Revionics offers retail price optimization and analytics services to chains such as Home Depot. Pros, known for its AI-driven pricing solutions, serves clients that include Nestlé, HP, and United Airlines, and collaborates with Microsoft on technological development.
The FTC aims to clarify the complexities surrounding this market that categorizes consumers and assigns targeted pricing for products and services.
FTC Chair Lina Khan commented, “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 agency is focusing its inquiry on four main aspects: the types of surveillance pricing products and services provided by each company, data collection methods, customer and sales information, and how these practices impact the prices customers ultimately pay.