The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to customize pricing for consumers.
The regulatory agency issued orders on Tuesday to eight firms across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC is seeking information on how these pricing strategies affect privacy, competition, and consumer protection.
Companies utilize tools like AI in a practice often referred to as “surveillance pricing” or “dynamic pricing,” where different prices are presented to consumers for identical products based on individual characteristics or behaviors, such as location, demographics, credit history, and shopping patterns.
Many of the firms contacted by the FTC are influential players providing transaction, sales, and pricing services to major companies both in the U.S. and internationally. For instance, Task is the transaction management provider for significant hospitality brands such as McDonald’s and Starbucks. Revionics supplies pricing software and analytics to well-known retail chains, including Home Depot. Pros, known for its AI-enhanced pricing solutions, counts Nestlé, HP, and United Airlines among its clients and collaborates with Microsoft on technological developments.
The FTC is aiming to clarify this “opaque market” that segments shoppers and applies targeted pricing strategies for products and services. FTC Chair Lina Khan emphasized the potential risks to consumer privacy, 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 is particularly interested in four main areas: the types of surveillance pricing products and services offered, data collection methods, customer and sales data, and the influence of these pricing practices on the prices consumers ultimately pay.