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 spanning various industries, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have received requests from the FTC for information about how these pricing practices affect privacy, competition, and consumer protection.
Companies utilize data-driven tools, including AI technology, in a practice referred to as “surveillance pricing” or “dynamic pricing.” This method allows businesses to present different prices for the same products based on consumer characteristics or behaviors, such as location, demographics, credit history, and online shopping habits.
Many of the firms under scrutiny by the FTC offer transactional, sales, and pricing solutions to some of the largest companies both in the United States and internationally. For instance, Task Software manages transactions for several hospitality giants like McDonald’s and Starbucks, while Revionics delivers retail price optimization and analytics for major chains, including Home Depot. Pros, a company known for its AI-driven pricing solutions, serves clients such as Nestlé, HP, and United Airlines and partners with Microsoft for technology development.
The FTC aims to unravel this “opaque market” that categorizes consumers and assigns targeted prices for various products and services.
FTC Chair Lina Khan expressed concerns over the potential privacy risks associated with companies that gather extensive personal data. “Now firms could be exploiting this vast trove of personal information to charge people higher prices,” she stated. She emphasized the need for transparency regarding the use of detailed consumer data in implementing surveillance pricing, and the inquiry intends to clarify the mechanisms at work in this complex pricing system.
The FTC is seeking information on four primary points: the specific surveillance pricing products and services offered by these companies, their data collection methods, customer and sales data, and the impact of these practices on the pricing consumers face.