The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence in 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 is seeking details about how these pricing strategies impact privacy, competition, and consumer protection.
These companies employ a technique known as “surveillance pricing” or “dynamic pricing,” which allows them to present different prices to consumers for the same products based on various factors such as location, demographics, credit history, and shopping behavior.
Many of the firms scrutinized by the FTC provide pricing, transaction, and sales services to some of the largest corporations in the United States and around the world. For instance, Task Software manages transactions for major hospitality brands like McDonald’s and Starbucks, while Revionics offers pricing optimization software for retail giants such as Home Depot. Pros supplies AI-driven pricing solutions to clients including Nestlé, HP, and United Airlines, and collaborates with Microsoft.
The FTC aims to unravel the complexities of this market, which categorizes consumers to set targeted pricing for products and services. 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 FTC’s investigation focuses on four main areas: the types of surveillance pricing products and services offered by each company, methods of data collection, customer and sales information, and the influence of these practices on the prices customers ultimately pay.