The Federal Trade Commission (FTC) has initiated a probe into several major companies regarding their use of customer data, algorithms, and artificial intelligence for tailoring individual pricing.
Eight companies across various industries — Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros — received orders from the FTC on Tuesday. The agency is seeking information on the impact of these pricing practices on privacy, competition, and consumer protection.
Using data tools like AI, companies engage in a practice known as “surveillance pricing” or “dynamic pricing,” which involves showing different prices to consumers for the same products based on characteristics or behaviors. These factors can include location, demographics, credit history, and browsing or shopping history.
Many of the companies contacted by the FTC offer transaction, sales, and pricing services to major U.S. and global firms. Task, for example, manages transactions for major hospitality companies such as McDonald’s and Starbucks. Revionics provides retail price optimization software to chains including Home Depot, while Pros, a software company that offers AI-powered pricing solutions, lists Nestlé, HP, and United Airlines among its clients and partners with Microsoft in technology development.
The FTC aims to uncover the workings of this “opaque market” that categorizes shoppers and sets 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,” said FTC Chair Lina Khan in a statement. “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 looking for information in four key areas: the types of surveillance pricing products and services each company offers; methods of data collection; customer and sales information; and the impact of surveillance practices on the prices customers pay.