The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to create personalized pricing strategies.
Eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received information requests from the FTC on Tuesday. The agency is exploring how these pricing tactics may affect privacy, competition, and consumer protection.
These firms utilize data-driven techniques, often referred to as “surveillance pricing” or “dynamic pricing,” which allows them to display varying prices for identical products based on individual consumer characteristics and behaviors. Factors influencing these prices can include a consumer’s location, demographic profile, credit history, and online shopping behavior.
Many of the companies targeted by the FTC provide transaction, sales, and pricing services to major firms both in the U.S. and internationally. For instance, Task Software plays a crucial role in transaction management for significant hospitality brands like McDonald’s and Starbucks, while Revionics offers pricing optimization solutions to global retailers, including Home Depot. Pros, recognized for its AI-driven pricing software, serves clients such as Nestlé, HP, and United Airlines and partners with technology giant Microsoft.
The FTC aims to clarify the workings of what it describes as an “opaque market” that classifies consumers and sets targeted prices for goods and services. FTC Chair Lina Khan expressed concerns about the implications of such practices, stating, “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. 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 is seeking details in four primary areas: the types of surveillance pricing products and services offered by each company, data collection methods, customer and sales information, and the effects of these surveillance practices on the prices customers ultimately pay.