The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their utilization of customer data, algorithms, and artificial intelligence for personalized pricing. The inquiry targets eight firms across various industries, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC has issued requests for information concerning the implications of these pricing strategies on privacy, competition, and consumer protection.
Companies are employing a method known as “surveillance pricing” or “dynamic pricing,” which involves presenting different prices to consumers for the same products based on individual characteristics or behaviors. Such factors can include a customer’s location, demographics, credit history, and browsing or shopping patterns.
Many of the firms under scrutiny provide transaction, sales, and pricing services for some of the largest companies both in the U.S. and worldwide. Notably, Task Software handles transaction management for major hospitality brands like McDonald’s and Starbucks. Revionics specializes in retail price optimization and pricing analytics, working with global chains such as Home Depot. Pros, a software firm emphasizing AI-driven solutions for pricing, serves clients like Nestlé, HP, and United Airlines, and partners with Microsoft for technology development.
The FTC aims to unravel the complexities of this “opaque market” that customizes prices for shoppers based on their profiles. 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 FTC is seeking information in four main areas: the types of surveillance pricing products and services offered, methods of data collection, customer and sales data, and how these practices affect the prices consumers pay.