The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their methods of using customer data, algorithms, and artificial intelligence to customize pricing on an individual basis.
On Tuesday, the FTC issued orders to eight firms from various sectors — Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros — seeking information about how these pricing strategies affect privacy, competition, and consumer protection.
These companies utilize data-driven practices such as “surveillance pricing,” also referred to as “dynamic pricing.” This strategy allows businesses to present different prices for the same products to various customers, influenced by factors like location, demographics, credit histories, and online behavior.
Many of the companies under scrutiny provide pricing, sales, and transaction services to major businesses both in the U.S. and internationally. For instance, Task Software manages transactions for well-known hospitality brands like McDonald’s and Starbucks, while Revionics offers pricing optimization software to major retailers, including Home Depot. Pros, known for its AI-driven pricing solutions, serves clients such as Nestlé, HP, and United Airlines and partners with Microsoft on technology development.
The FTC aims to uncover the details of this “opaque market” which determines pricing based on specific consumer categorizations.
FTC Chair Lina Khan stated, “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 seeking insights in four main areas: the types of surveillance pricing products and services offered by each company, their methods of data collection, customer and sales information, and the impact of these practices on the final prices customers are charged.