The Federal Trade Commission (FTC) has initiated an inquiry into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to adjust pricing for individual consumers.
Eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received requests from the agency on Tuesday to provide information about how these pricing strategies affect privacy, competition, and consumer protection.
Through data tools, particularly AI, businesses engage in a practice known as “surveillance pricing” or “dynamic pricing,” which allows them to display varying prices for the same products based on consumer profiles. Factors influencing these variations can include location, demographic information, credit history, and online behavior.
Many of the companies targeted by the FTC supply transaction, sales, and pricing services to some of the largest corporations both in the U.S. and internationally. Task Software provides transaction management for major hospitality brands like McDonald’s and Starbucks. Revionics specializes in retail price optimization software used by global retailers, including Home Depot. Pros positions itself as a provider of AI-driven pricing solutions and counts Nestlé, HP, and United Airlines among its clients; it also collaborates with Microsoft on technology development.
The FTC aims to clarify the ambiguous market that allows companies to categorize consumers and establish tailored pricing.
“Companies that collect Americans’ personal data can jeopardize individuals’ privacy. Now, these companies might be leveraging this extensive data to impose higher prices,” stated FTC Chair Lina Khan. “Americans have the right to understand whether businesses are utilizing detailed consumer information for surveillance pricing, and the FTC’s investigation will illuminate this obscure network of pricing intermediaries.”
The FTC’s inquiry focuses on four main aspects: the types of surveillance pricing products and services offered by each company, data collection methods, customer and sales information, and the impact of these surveillance practices on consumer pricing.