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 inquiry targets eight firms across various sectors: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. These companies have been ordered to provide information on how their pricing practices affect privacy, competition, and consumer protection.
Companies utilize data tools, including AI, in a practice referred to as “surveillance pricing” or “dynamic pricing.” This approach allows them to present different prices to consumers based on various factors such as location, demographic information, credit history, and past online shopping behavior.
Many of the firms under investigation offer transactional, sales, and pricing services to major businesses in the U.S. and internationally. For instance, Task Software manages transactions for several well-known hospitality brands, including McDonald’s and Starbucks. Revionics specializes in retail price optimization software for global chains like Home Depot, while Pros provides AI-driven pricing solutions to clients such as Nestlé, HP, and United Airlines, and partners with Microsoft for technology development.
The FTC aims to uncover the complexities of this “opaque market,” where consumer categorization leads to targeted pricing based on individual data.
FTC Chair Lina Khan emphasized the risks associated with such practices, stating, “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 seeking insights into four main areas: the types of surveillance pricing products and services provided by the companies, their data collection methods, customer and sales information, and the influence of these pricing practices on the final costs incurred by consumers.