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.
The FTC has issued orders to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking information on the implications of these practices on privacy, competition, and consumer protection.
These companies utilize data-driven tools, such as AI, to implement a practice known as “surveillance pricing” or “dynamic pricing,” which allows them to display varying prices for identical products based on factors like consumer location, demographics, credit history, and browsing or shopping habits.
Several of the firms involved in the investigation provide critical transaction, sales, and pricing services to major corporations in the U.S. and internationally. For instance, Task supports a number of leading hospitality brands, including McDonald’s and Starbucks. Revionics offers retail price optimization software and pricing analytics used by global retailers, such as Home Depot. Pros markets itself as a provider of AI-driven pricing solutions and serves clients like Nestlé, HP, and United Airlines, while also partnering with Microsoft for technology development.
The FTC aims to investigate this “opaque market” that profiles consumers and employs targeted pricing for goods and services. 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 particularly interested in four main aspects: the types of surveillance pricing products and services each firm provides; their data collection methods; customer and sales data; and the influence of these practices on the prices consumers ultimately pay.