The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their practices associated with customer data, algorithms, and artificial intelligence in relation to individualized pricing strategies.
On Tuesday, the FTC sent information requests to eight prominent firms: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The inquiry focuses on the implications of these pricing methods for privacy, competition, and consumer protection.
Companies are utilizing AI-driven data analysis to implement a practice called “surveillance pricing” or “dynamic pricing.” This method allows businesses to display varying prices for the same products based on different consumer characteristics, such as location, demographics, credit history, and shopping behavior.
Many of the firms that received FTC inquiries play a significant role in transaction and pricing services for some of the largest companies in the U.S. and around the world. For instance, Task Software manages transactions for major hospitality brands like McDonald’s and Starbucks, while Revionics provides pricing analytics for retailers such as Home Depot. Pros, which offers AI-enhanced pricing solutions, serves high-profile clients including Nestlé, HP, and United Airlines, and collaborates with Microsoft.
The FTC aims to unravel the complexities of an “opaque market” that categorizes consumers and sets targeted prices based on collected data. FTC Chair Lina Khan highlighted the risks posed by the collection of personal data, stating that companies could potentially exploit this information to charge consumers higher prices. She emphasized the necessity for transparency, indicating that Americans have a right to understand whether their data is being used for surveillance pricing strategies.
The investigation will focus on four critical areas: the types of surveillance pricing products and services offered, the methods of data collection, customer and sales records, and the way these practices affect the pricing that consumers face.
This investigation underscores a growing scrutiny of how data-driven pricing systems may impact consumer rights and market fairness. It represents a proactive step toward ensuring accountability among companies utilizing advanced AI and data analytics, promoting a more transparent and equitable marketplace. As consumers become increasingly aware of these practices, the initiative may pave the way for strengthened regulations that prioritize privacy and fairness in pricing.