The Federal Trade Commission (FTC) has initiated an investigation into several leading companies regarding their use of customer data, algorithms, and artificial intelligence in tailoring pricing strategies.
On Tuesday, the agency issued orders to eight firms from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, requesting details about how these pricing methods impact privacy, competition, and consumer protection.
These companies utilize data-driven techniques, often referred to as “surveillance pricing” or “dynamic pricing,” which enable them to present different prices for the same products to consumers based on various factors such as location, demographics, credit history, and shopping behavior.
Many of the companies under investigation offer transaction and pricing services to some of the largest organizations in the U.S. and worldwide. For instance, Task provides transaction management services to major hospitality brands like McDonald’s and Starbucks, while Revionics delivers retail price optimization software to global chains including Home Depot. Pros, which specializes in AI-driven pricing solutions, counts Nestlé, HP, and United Airlines as clients and collaborates with Microsoft for technology development.
The FTC aims to clarify the functioning of what it describes as an “opaque market” that categorizes consumers and assigns targeted prices for products and services. FTC Chair Lina Khan highlighted concerns over privacy and potential exploitation of personal data for higher pricing. She stated that Americans have the right to know whether businesses are using detailed consumer data for surveillance pricing, emphasizing the need for transparency in this “shadowy ecosystem” of pricing intermediaries.
The agency is seeking information in four critical areas: the types of surveillance pricing solutions offered by these companies, their data collection methods, relevant customer and sales information, and the effects of these practices on the final prices consumers pay.