The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to personalize pricing for individual consumers.
The investigation involves eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. These companies received directives from the FTC Tuesday, requesting information on how such pricing practices affect privacy, competition, and consumer protection.
These companies utilize data tools for a strategy known as “surveillance pricing,” or “dynamic pricing,” which allows them to present varying prices for the same products based on consumer characteristics and behaviors. Factors influencing pricing may include a customer’s location, demographics, credit history, and their browsing or shopping history.
Many of the firms targeted by the FTC provide transaction, sales, and pricing services to major U.S. and global companies. Task Software facilitates transaction management for prominent hospitality brands such as McDonald’s and Starbucks. Revionics offers retail pricing optimization and analytics to worldwide retailers, including Home Depot. Pros, a software firm specializing in AI-driven pricing solutions, has clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC aims to clarify the “opaque market” that classifies shoppers and establishes targeted pricing for various products and services.
FTC Chair Lina Khan stated, “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 in four main areas: the types of surveillance pricing products each company offers, data collection methods, customer and sales data, and the impact of these practices on consumer pricing.