The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
Eight companies from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have received requests from the FTC for information about the implications of these pricing methods on privacy, competition, and consumer safeguards.
These companies employ data-driven methods, such as artificial intelligence, in what is termed “surveillance pricing” or “dynamic pricing.” This practice allows businesses to present different pricing to customers for the same products based on personal factors including location, demographics, credit history, and online behavior.
Many of the firms investigated by the FTC offer transaction, sales, and pricing services to some of the largest companies in the U.S. and around the world. For instance, Task operates transaction management for major hospitality brands like McDonald’s and Starbucks, while Revionics specializes in retail price optimization analytics for global retailers such as Home Depot. Pros, which claims to provide AI-powered pricing solutions, serves notable clients including Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC aims to clarify what it describes as an “opaque market” that classifies consumers and establishes targeted pricing strategies for products and services.
“Companies that collect personal data can jeopardize individuals’ privacy. Now, these businesses may be leveraging this vast amount of data to impose higher prices,” stated FTC Chair Lina Khan. “Consumers should be aware if corporations are utilizing extensive data to implement surveillance pricing, and the FTC’s investigation will illuminate this obscure network of pricing intermediaries.”
The FTC is gathering information on four main aspects: the types of surveillance pricing solutions offered by these companies; their data collection methods; customer and sales data; and the effect of these practices on consumer pricing.