The Federal Trade Commission (FTC) has initiated an investigation concerning several prominent companies regarding their use of customer data, algorithms, and artificial intelligence in the practice of personalized pricing. This investigation targets firms like Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, which were issued information requests to understand how their pricing strategies impact privacy, competition, and consumer protection.
The practice at the center of this inquiry, known as “surveillance pricing” or “dynamic pricing,” involves utilizing advanced data tools to offer different prices for the same products based on individual consumer characteristics or behaviors. Factors such as location, demographics, credit history, and online shopping habits can influence the prices displayed to customers.
Many of the companies under scrutiny are pivotal players in providing transaction and pricing services to major businesses both in the United States and internationally. For instance, Task Software manages transactions for significant hospitality enterprises, including McDonald’s and Starbucks, while Revionics specializes in retail price optimization for well-known retailers like Home Depot. Pros, which markets itself as an AI-driven pricing technology firm, has vast clientele including Nestlé and United Airlines, and collaborates closely with Microsoft.
Chairwoman Lina Khan emphasized the importance of transparency in this “opaque market,” cautioning that leveraging personal data could potentially lead to price discrimination, putting consumer privacy at risk. She asserted that the American public deserves clarity regarding whether their detailed personal information is being exploited for elevated pricing strategies, and that the FTC’s investigation aims to illuminate this intricate ecosystem of pricing intermediaries.
The FTC is specifically seeking insights into several areas: the surveillance pricing products and services each company offers, their data collection methodologies, customer and sales data, and how these practices ultimately affect consumer pricing.
This investigation comes at a crucial time when consumers are increasingly concerned about privacy and fairness in pricing. The transparency brought about by the FTC’s efforts could lead to more ethical practices in data usage and pricing strategies, fostering a fairer marketplace for consumers. By exposing the workings of these pricing strategies, the FTC can help ensure that businesses operate with greater accountability and respect for consumer rights.