The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence in personalized pricing strategies.
Eight companies from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have been ordered by the regulatory body to provide information on how these pricing practices affect privacy, competition, and consumer protection.
These companies utilize advanced data tools, such as AI, to employ “surveillance pricing,” also known as “dynamic pricing,” which allows them to present different prices for the same products based on individual consumer characteristics and behaviors. Factors influencing these pricing variations often include geographical location, demographic details, credit histories, and online shopping behavior.
Many of the firms involved offer transaction, sales, and pricing services to major corporations both in the U.S. and worldwide. Task Software supports several key players in the hospitality sector, including McDonald’s and Starbucks. Revionics delivers pricing optimization software to well-known retail chains like Home Depot, while Pros specializes in AI-driven pricing solutions, serving clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft as a technology partner.
The FTC aims to investigate the complexities of this “opaque market,” where shoppers are categorized, and targeted pricing is set for products and services.
FTC Chair Lina Khan emphasized the potential risks to consumer privacy, 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 agency is focusing its inquiry on four main aspects: the types of surveillance pricing products and services offered by the companies, data collection methods, customer and sales data, and the impact of these practices on the final prices consumers pay.