The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies concerning their utilization of customer data, algorithms, and artificial intelligence to customize pricing for individual consumers.
The investigation targets eight firms across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC issued orders to these companies, requesting information on how these pricing practices impact privacy, competition, and consumer protection.
The companies in question utilize data tools, such as artificial intelligence, to engage in a practice known as “surveillance pricing” or “dynamic pricing.” This approach allows them to display different prices for identical products based on consumer characteristics or behaviors, which can include factors such as location, demographics, credit history, and online shopping activity.
Many of the firms investigated provide transaction, sales, and pricing services to some of the largest businesses in the United States and worldwide. Task, for instance, manages transactions for major hospitality chains, including McDonald’s and Starbucks. Revionics specializes in retail price optimization and analytics for companies like Home Depot. Pros, a software firm claiming to deliver AI-powered pricing solutions, counts Nestlé, HP, and United Airlines among its clientele and is a technology development partner with Microsoft.
The FTC aims to investigate the “opaque market” where shoppers are categorized and targeted with specific prices for products and services. FTC Chair Lina Khan emphasized the potential risks associated with companies gathering personal data from Americans, suggesting that it may lead to higher prices for consumers. Khan stated, “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 is seeking insights into four primary areas: the types of surveillance pricing products and services offered by each company, data collection methods, customer and sales information, and the influence of these surveillance practices on the prices charged to consumers.