The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to implement personalized pricing strategies.
The inquiry has affected eight companies across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC issued requests for information on Tuesday to examine how these pricing practices impact privacy, competition, and consumer protection.
Companies are utilizing data tools, such as AI, to engage in what is known as “surveillance pricing” or “dynamic pricing.” This practice allows different prices to be presented to consumers for identical products based on their personal attributes or behaviors, including location, demographics, credit history, and online activity.
Many of the companies under scrutiny are significant players in providing transaction, sales, and pricing services to major businesses both in the U.S. and globally. Task Software manages transactions for several large hospitality brands, including McDonald’s and Starbucks. Revionics specializes in retail price optimization, offering software and pricing analytics to chains like Home Depot. Pros, a company known for its AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clients and collaborates with Microsoft for tech development.
The FTC aims to explore this “opaque market” that classifies consumers and sets targeted prices for goods and services. “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,” stated FTC Chair Lina Khan. She emphasized the importance of transparency concerning the use of consumer data in pricing strategies, asserting that the inquiry would clarify the obscure pricing practices prevalent in the market.
The FTC’s investigation is focused on four primary areas: the types of surveillance pricing products and services provided by each firm, their data collection methods, customer and sales data, and the ways these practices influence the final prices paid by consumers.