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 individuals.
The regulatory agency has sent orders to eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking details about the effects of these pricing strategies on privacy, competition, and consumer protection.
Companies have been employing “surveillance pricing,” also referred to as “dynamic pricing,” whereby different prices are presented to consumers for the same products based on factors such as location, demographics, credit history, and online shopping behavior.
Many of the firms involved provide transaction, sales, and pricing services for some of the largest businesses in the U.S. and internationally. Task Software manages transactions for numerous well-known hospitality companies, including McDonald’s and Starbucks. Revionics specializes in retail price optimization software for major chains like Home Depot, while Pros, known for its AI-driven pricing solutions, services clients such as Nestlé, HP, and United Airlines. Pros also serves as a technology development partner for Microsoft.
The FTC aims to investigate the “opaque market” that profiles consumers and sets targeted prices for products and services.
“Companies that collect personal data from Americans jeopardize their privacy. There’s a concern that these firms might be using extensive personal information to impose higher prices,” stated FTC Chair Lina Khan. “Americans have the right to know if their detailed consumer data is being used to implement surveillance pricing, and this inquiry will illuminate the hidden workings of pricing intermediaries.”
The FTC is particularly interested in four main areas: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales information, and the impact of these practices on the prices consumers ultimately pay.