The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their utilization of customer data, algorithms, and artificial intelligence in personalized pricing strategies.
On Tuesday, the FTC issued orders to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking information about how these practices affect privacy, competition, and consumer protection.
These companies engage in a practice known as “surveillance pricing,” also referred to as “dynamic pricing,” which allows them to present differing prices for the same products based on consumer characteristics or behaviors. Factors influencing these tailored prices may include location, demographic information, credit history, and browsing or shopping habits.
Many of the firms under investigation supply transaction, sales, and pricing services to some of the largest companies both in the U.S. and globally. Task Software is involved in transaction management for major hospitality brands, including McDonald’s and Starbucks. Revionics offers price optimization software and pricing analytics to numerous renowned retailers, such as Home Depot. Pros, which provides AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clients and collaborates with Microsoft on technology developments.
The FTC aims to investigate the “opaque market” that engages in consumer categorization and the establishment of targeted prices.
“Companies that collect personal data from Americans may jeopardize their privacy. Such firms could be using extensive personal information to charge higher prices,” stated FTC Chair Lina Khan. “Americans deserve transparency regarding whether businesses are utilizing detailed consumer data for surveillance pricing, and this inquiry will illuminate the complex landscape of pricing intermediaries.”
In its investigation, the FTC is focusing on four main areas: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales information, and the impact of these surveillance practices on the prices consumers ultimately pay.