The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence in setting individualized prices. In total, eight firms have been requested to provide information on how their pricing strategies affect privacy, competition, and consumer protection.
The companies involved include Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. This request was made public on Tuesday, as the FTC seeks to understand the ramifications of these pricing methods, which are often described as “surveillance pricing” or “dynamic pricing.” This practice allows companies to display varying prices for identical products to different consumers based on specific attributes such as location, demographics, credit history, and past shopping behavior.
Several of the companies mentioned provide transaction and pricing services to major retailers across the United States and beyond. Notably, Task Software supports transaction management for key players in the hospitality sector, including McDonald’s and Starbucks. Revionics specializes in retail price optimization tools and analytics, servicing well-known global chains like Home Depot. Pros markets itself as an AI-driven pricing solutions provider, with clients including Nestlé, HP, and United Airlines, and has a partnership with Microsoft.
The FTC aims to explore what it describes as a “opaque market” that sorts consumers into categories for price differentiation. According to FTC Chair Lina Khan, there are concerns that companies exploiting personal data could lead to higher prices for individuals. Khan emphasized the importance of transparency about whether businesses are using consumer data to implement surveillance pricing, stating that the inquiry intends to clarify the complexities surrounding this pricing strategy.
The FTC is focusing its inquiry on four main areas: the types of surveillance pricing services offered by these firms, their data collection methods, customer and sales data, and the influence of these practices on final pricing for consumers.