The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies concerning their use of customer data, algorithms, and artificial intelligence to create individualized pricing strategies.
The inquiry targets eight companies from various sectors: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC has issued orders to these firms to gather information on how their pricing practices may impact privacy, competition, and consumer protection.
These companies implement techniques referred to as “surveillance pricing” or “dynamic pricing,” which involve presenting different prices to consumers for the same products based on factors such as location, demographics, credit history, and online behavior.
Many of the firms being scrutinized provide transaction, sales, and pricing services to some of the largest companies both in the U.S. and internationally. Task Software manages transactions for notable hospitality brands like McDonald’s and Starbucks, while Revionics offers retail price optimization software and analytics to global chains, including Home Depot. Pros, which markets itself as a provider of AI-based pricing solutions, serves prominent clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft as a technology development partner.
The FTC aims to investigate the “opaque market” that identifies shoppers and establishes targeted pricing for various goods and services.
“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,” stated FTC Chair Lina Khan. “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 has specified that its investigation will focus on four main areas: 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 the prices consumers pay.