The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to customize pricing for individual consumers.
The FTC has summoned eight firms from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, for information about how their pricing strategies impact privacy, competition, and consumer protection.
These companies utilize data-driven methods, often referred to as “surveillance pricing” or “dynamic pricing,” which adjust prices based on a customer’s specific characteristics or behaviors, such as location, demographics, credit history, and online shopping habits.
Among the firms being investigated, Task Software is known for its transaction management services supporting major hospitality brands like McDonald’s and Starbucks. Revionics offers retail price optimization and pricing analytics to global retailers, including Home Depot. Pros, which provides AI-based pricing solutions, counts several major corporations, including Nestlé, HP, and United Airlines, as clients and collaborates with Microsoft on technology development.
The FTC aims to clarify concerns surrounding this “opaque market” that categorizes shoppers to assign different prices for the same products 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. “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 details in four main areas: the types of surveillance pricing products and services provided by each firm, data collection methods, customer and sales information, and the influence of these practices on the prices consumers actually pay.