The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their practices related to customer data, algorithms, and artificial intelligence in setting individualized prices.
On Tuesday, the FTC issued orders to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, requesting information on how these pricing strategies impact privacy, competition, and consumer protection.
Companies are utilizing sophisticated data tools like artificial intelligence to implement practices commonly referred to as “surveillance pricing” or “dynamic pricing,” which involve displaying varying prices for the same products based on consumer characteristics and behaviors. Factors influencing these prices may include location, demographics, credit history, and browsing or shopping history.
Many of the companies under scrutiny provide transaction and pricing services for some of the largest corporations in the U.S. and worldwide. Task Software manages transactions for major hospitality brands, including McDonald’s and Starbucks, while Revionics specializes in retail price optimization and analytics for global chains like Home Depot. Additionally, Pros, which offers AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clientele and is a technology partner to Microsoft.
The FTC aims to explore the intricacies of this “opaque market” that categorizes consumers and establishes targeted pricing for goods and services.
FTC Chair Lina Khan emphasized the potential risks to consumer privacy posed by companies that gather personal data. She stated, “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 commission is particularly interested in four main areas: the types of surveillance pricing products and services available, the methods of data collection employed, customer and sales information, and how these surveillance techniques affect final pricing for consumers.