The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
On Tuesday, the FTC issued information requests to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency aims to assess how these pricing practices impact privacy, competition, and consumer protection.
These companies employ a technique referred to as “surveillance pricing” or “dynamic pricing,” which enables them to present different prices for the same products to individual consumers based on various factors such as location, demographics, credit history, and online shopping behavior.
Most of the firms being investigated provide transaction, sales, and pricing services to major corporations in the United States and abroad. Task Software manages transactions for significant hospitality brands like McDonald’s and Starbucks. Revionics offers retail price optimization software to various global retailers, including Home Depot. Similarly, Pros provides AI-driven pricing solutions and has notable clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft as a technology partner.
The FTC is keen to uncover the dynamics of what it calls an “opaque market” that determines how shoppers are classified and how targeted prices are set for goods and services.
FTC Chair Lina Khan stated, “Companies that collect Americans’ personal data can jeopardize people’s privacy. Now these firms may be taking advantage of extensive personal information to impose higher prices. Americans deserve transparency regarding whether businesses are utilizing detailed consumer data for surveillance pricing, and the FTC’s investigation will clarify this obscure realm of pricing intermediaries.”
The FTC is seeking information in four primary areas: the types of surveillance pricing products and services offered by each company, the methods of data collection, sales and customer information, and the impact of these surveillance practices on the prices consumers pay.