The Federal Trade Commission (FTC) has initiated an investigation involving several prominent companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
On Tuesday, the FTC issued notices to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking information on how these practices affect privacy, competition, and consumer protection.
These companies utilize advanced data tools in a method referred to as “surveillance pricing,” or “dynamic pricing,” where different prices for the same products are presented to consumers based on various factors such as location, demographics, credit history, and online behavior.
Many of the firms involved provide transaction, sales, and pricing services to major U.S. and global businesses. Task Software supports multiple leading hospitality brands, including McDonald’s and Starbucks. Revionics delivers retail price optimization software and pricing analytics to global chains like Home Depot. Pros, a provider of AI-driven pricing solutions, has notable clients including Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC aims to clarify the complexities of this “opaque market,” where consumer categorization leads to targeted pricing for products and services.
FTC Chair Lina Khan remarked, “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 focusing on four main aspects: the types of surveillance pricing solutions offered by each firm, the data collection methods employed, customer and sales information, and the impact of these surveillance practices on the pricing seen by consumers.