The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their usage of customer data, algorithms, and artificial intelligence for personalized pricing. This inquiry targets eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking to understand the implications of these pricing strategies on privacy, competition, and consumer protection.
The practice under scrutiny, referred to as “surveillance pricing” or “dynamic pricing,” enables companies to present different prices for identical products based on individual customer traits or behaviors. Factors influencing pricing can include a customer’s location, demographic information, credit history, and online shopping behavior.
Many of the companies involved provide transaction, sales, and pricing solutions to major corporations both in the U.S. and globally. Task Software manages transactions for several large hospitality chains, such as McDonald’s and Starbucks. Revionics offers retail price optimization and pricing analytics to global giants, including Home Depot. Pros, a software provider specializing in AI-driven pricing solutions, serves clients like Nestlé, HP, and United Airlines and collaborates with Microsoft for technology development.
The FTC aims to clarify the complexities of this “opaque market” where customer categorization can lead to varied pricing strategies. FTC Chair Lina Khan emphasized the potential risks to consumer privacy, stating, “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 specifically interested in four areas: the types of surveillance pricing products and services offered by each firm, methods of data collection, customer and sales information, and the impact of these surveillance techniques on the prices customers ultimately pay.