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.
The inquiry involves eight firms from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC sent orders to these companies, seeking detailed information about how their pricing practices may affect privacy, competition, and consumer protection.
These companies utilize data-driven tools, often referred to as “surveillance pricing” or “dynamic pricing,” to display different prices for the same products based on individual consumer attributes and behaviors. Factors such as location, demographics, credit history, and online behavior can influence the pricing presented to different customers.
Many of the firms involved provide transaction processing, sales, and pricing services to major corporations both in the U.S. and internationally. For instance, Task Software manages transactions for notable hospitality brands like McDonald’s and Starbucks. Revionics specializes in retail price optimization software and analytics for various global retail chains, including Home Depot. Pros, highlighting its AI-driven pricing solutions, serves clients like Nestlé, HP, and United Airlines, and collaborates with Microsoft in technology development.
The FTC aims to investigate this “opaque market” that categorizes consumers and sets targeted pricing strategies. FTC Chair Lina Khan stated, “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 commission is focusing on four main areas: the range of surveillance pricing products and services offered by each company, methods of data collection, customer and sales data, and the impact of these surveillance pricing practices on the prices consumers ultimately pay.