The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to customize pricing on an individual basis.
On Tuesday, the FTC issued orders to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, requesting insights into how these pricing strategies affect privacy, competition, and consumer protection.
These companies utilize data-driven tools, such as AI, to implement a practice known as “surveillance pricing,” or “dynamic pricing,” which presents different prices to consumers for the same products based on various factors, including location, demographics, credit history, and online browsing or shopping behaviors.
Many of the firms targeted by the FTC provide transaction, sales, and pricing solutions to some of the largest companies in both the U.S. and globally. Task is known for managing transactions for major hospitality brands like McDonald’s and Starbucks, while Revionics supplies retail price optimization software to global retailers, including Home Depot. Pros, a company specializing in AI-driven pricing solutions, boasts clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC’s goal is to understand this “opaque market” in which companies categorize shoppers and set tailored prices for different products and services.
“Firms that harvest Americans’ personal data can pose risks to individuals’ privacy. Now, companies could be using this substantial amount of personal information to charge consumers higher prices,” stated FTC Chair Lina Khan. “Americans have the right to know if businesses are utilizing detailed consumer data for surveillance pricing, and the FTC’s inquiry aims to illuminate this obscure ecosystem of pricing intermediaries.”
The FTC seeks information in four primary areas: the types of surveillance pricing products and services offered by each company; data collection methods; customer and sales data; and the impact of these surveillance practices on the prices consumers actually pay.