The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to implement personalized pricing strategies.
On Tuesday, the FTC issued information requests to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The regulatory body is examining the implications of these pricing practices on consumer privacy, competition, and protection.
Companies are utilizing data tools, such as artificial intelligence, in a practice referred to as “surveillance pricing” or “dynamic pricing,” where different prices for identical products are displayed to consumers based on various factors, including location, demographic data, credit history, and online browsing or shopping behavior.
Many of the firms under scrutiny are major providers of transaction, sales, and pricing services for some of the largest corporations in the U.S. and worldwide. Task Software manages transactions for notable hospitality brands like McDonald’s and Starbucks, while Revionics offers retail price optimization software and pricing analytics to numerous retail chains, including Home Depot. Additionally, Pros, which markets itself as a provider of AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clients and is a technology partner of Microsoft.
The FTC aims to clarify the workings of this “opaque market” that profiles shoppers and adjusts prices for products and services accordingly.
“Companies that collect personal data from Americans can jeopardize individuals’ privacy. They may be using this substantial amount of personal information to set higher prices,” stated FTC Chair Lina Khan. “Americans have a right to know whether businesses are leveraging detailed consumer data to implement surveillance pricing, and the FTC’s investigation will bring transparency to this obscure pricing ecosystem.”
The FTC is focusing on four main areas of inquiry: the types of surveillance pricing products and services offered by each company; methods of data collection; customer and sales information; and the impact of these surveillance practices on the final prices customers pay.