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 strategies.
Eight companies across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received inquiries from the FTC on Tuesday. The agency is seeking information on the implications of these practices for consumer privacy, competition, and protection.
These companies utilize data-driven methods, such as AI, to implement “surveillance pricing” or “dynamic pricing,” which allows them to present varying prices for identical products based on consumer characteristics and behaviors, such as location, demographics, credit history, and online shopping patterns.
Many of the firms involved provide transaction, sales, and pricing services to major corporations in the U.S. and internationally. Task Software manages transactions for well-known hospitality brands, including McDonald’s and Starbucks. Revionics is recognized for its retail price optimization software used by significant entities like Home Depot. Pros, which specializes in AI-driven pricing solutions, serves clients such as Nestlé, HP, and United Airlines, and is also a technology partner of Microsoft.
The FTC aims to clarify this “opaque market,” which categorizes shoppers and assigns targeted pricing for goods 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,” stated FTC Chair Lina Khan. “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 by each firm, data collection methods, customer and sales information, and the effect of these practices on the prices consumers ultimately pay.