The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their utilization of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
Eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, were issued information requests by the FTC on Tuesday. The agency aims to understand the implications of these pricing practices on privacy, competition, and consumer protection.
These companies are engaged in what is referred to as “surveillance pricing,” also known as “dynamic pricing,” which allows them to present varying prices for the same products based on individual consumer attributes such as location, demographic information, credit history, and online behavior.
Many firms under investigation provide transaction and pricing services to some of the largest companies in both the United States and globally. Task Software, for instance, handles transaction management for well-known hospitality brands like McDonald’s and Starbucks. Revionics supplies pricing analytics and retail price optimization tools to numerous international retailers, including Home Depot. Pros, which offers AI-driven pricing solutions, serves clients such as Nestlé, HP, and United Airlines, and has collaboration ties with Microsoft.
The FTC seeks to clarify the complexities of this “opaque market” that segments shoppers and establishes targeted pricing for products and services.
“Companies that collect personal data from Americans can jeopardize individuals’ privacy. It appears that these firms may be leveraging extensive personal information to impose higher prices,” stated FTC Chair Lina Khan. “Consumers have the right to understand whether businesses are utilizing detailed consumer data to implement surveillance pricing, and the FTC’s investigation aims to illuminate this obscure pricing landscape.”
The FTC’s inquiries will focus on four main aspects: the types of surveillance pricing solutions each company provides; methods of data collection; customer and sales data; and the influence of these surveillance practices on the prices consumers ultimately pay.