The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their methods of utilizing customer data, algorithms, and artificial intelligence for personalized pricing strategies.
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The FTC has issued inquiries to eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The investigation aims to examine the impact of their pricing practices on consumer privacy, competition, and protection.
These companies engage in a pricing technique referred to as “surveillance pricing,” also known as “dynamic pricing.” This approach allows businesses to display varying prices to different consumers for the same products, influenced by factors such as location, demographics, credit history, and online behavior.
Many of the firms under scrutiny provide transaction, sales, and pricing solutions to some of the largest businesses in the U.S. and worldwide. Task Software manages transactions for prominent hospitality brands, such as McDonald’s and Starbucks. Revionics offers retail pricing optimization software and analytics to major chains like Home Depot. Pros, which markets itself as a provider of AI-driven pricing solutions, serves clients including Nestlé, HP, and United Airlines, and is also a technology partner of Microsoft.
The FTC aims to uncover the complexities of a pricing ecosystem that systematically categorizes shoppers and establishes targeted prices for goods and services.
FTC Chair Lina Khan emphasized that the collection of personal data by these firms poses a risk to consumer privacy, warning that companies might exploit this data to set higher prices. She 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 details in four main areas: the types of surveillance pricing services offered by each company, methods of data collection, customer and sales data, and the influence of these surveillance practices on consumer pricing.