The Federal Trade Commission (FTC) has initiated an investigation into several major corporations regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
The companies involved in this investigation include Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. On Tuesday, the FTC issued orders to these firms seeking information about how their pricing practices affect privacy, competition, and consumer protection.
These companies utilize data-driven tools, including AI, to implement what is known as “surveillance pricing” or “dynamic pricing.” This practice allows them to display varying prices for the same products based on factors such as a consumer’s location, demographic information, credit history, and online behavior.
Many of the firms under scrutiny by the FTC provide transaction and pricing services to some of the largest businesses in the U.S. and beyond. Task Software, for instance, is the transaction management provider for significant hospitality giants like McDonald’s and Starbucks. Revionics specializes in retail price optimization software and analytics for numerous global retailers, including Home Depot. Pros, which markets itself as a provider of AI-driven pricing solutions, serves high-profile clients such as Nestlé, HP, and United Airlines, and also collaborates with Microsoft on technology development.
The FTC aims to uncover the complexities of this “opaque market” that uses consumer profiling to dictate targeted pricing for goods and services.
“Companies that collect personal data from Americans could be compromising their privacy. They may also be using this extensive data to impose higher prices,” stated FTC Chair Lina Khan. “Consumers have the right to understand whether their data is being used for surveillance pricing, and this inquiry will illuminate the hidden workings of this pricing ecosystem.”
The FTC is requesting information in four critical areas: the types of surveillance pricing products and services offered by each company; methods of data collection; details on customer and sales data; and the effects of these surveillance practices on the prices consumers ultimately pay.