The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to create personalized pricing strategies.
On Tuesday, eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, were issued orders by the regulatory agency. The FTC aims to gather insights on how these pricing practices affect privacy, competition, and consumer protection.
Companies utilize data-driven tools, often referred to as “surveillance pricing” or “dynamic pricing,” to display varying prices for identical products based on a consumer’s specific characteristics or behaviors. Factors such as location, demographics, credit history, and browsing or shopping history can influence these price variations.
Many of the firms under FTC scrutiny are key providers of transaction, sales, and pricing services for some of the largest corporations in the U.S. and globally. Among them, Task manages transactions for major hospitality brands like McDonald’s and Starbucks. Revionics offers retail price optimization software and analytics to global retailers, including Home Depot. Pros, which promotes artificial intelligence-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clientele and collaborates with Microsoft.
The FTC is investigating this “opaque market” that sorts consumers and assigns targeted prices for goods 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 is focusing its inquiry on four primary aspects: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales information, and the influence of these surveillance practices on consumer pricing.