The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
Eight companies across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have been ordered by the FTC to provide information about the effects of these pricing practices on privacy, competition, and consumer protection.
These companies utilize data-driven approaches, often referred to as “surveillance pricing” or “dynamic pricing,” which allows them to offer different prices for the same products based on individual consumer attributes or behaviors, such as location, demographics, credit history, and browsing habits.
Many of the firms under scrutiny offer transaction, sales, and pricing services to some of the largest corporations in the United States and around the world. Task Software plays a crucial role in transaction management for major hospitality brands, including McDonald’s and Starbucks. Revionics specializes in retail price optimization software and pricing analytics for global retailers, including Home Depot. Pros, which claims to provide AI-driven pricing solutions, serves well-known clients such as Nestlé, HP, and United Airlines, and partners with Microsoft for technology development.
The FTC aims to uncover practices within this “opaque market” that segment consumers and set targeted pricing strategies.
FTC Chair Lina Khan remarked, “Companies that collect Americans’ personal data may jeopardize individuals’ privacy. They could be utilizing this extensive range of personal information to impose higher prices. Americans have the right to understand whether businesses are leveraging detailed consumer data to implement surveillance pricing. The FTC’s investigation will illuminate this obscure ecosystem of pricing intermediaries.”
The agency is seeking information in four main areas: the types of surveillance pricing services offered by each company, data collection methods, customer and sales information, and how these surveillance practices impact the prices charged to consumers.