The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies concerning their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
The investigation has targeted eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, with orders issued for them to provide information on how these pricing methods affect privacy, competition, and consumer protection.
These companies employ a practice referred to as “surveillance pricing” or “dynamic pricing,” which involves displaying varying prices for the same products to different consumers based on specific traits or behaviors such as location, demographic profile, credit history, and online shopping habits.
Many of the firms involved offer transaction, sales, and pricing services to major corporations in the U.S. and worldwide. For instance, Task Software manages transactions for notable hospitality businesses, including McDonald’s and Starbucks. Revionics specializes in retail price optimization and analytics for several international chains, like Home Depot. Pros, which promotes itself as a provider of AI-driven pricing solutions, serves high-profile clients such as Nestlé, HP, and United Airlines, and is also a technology partner with Microsoft.
The FTC aims to clarify the complexities of this “opaque market” where consumers can be categorized for targeted pricing on products and services.
FTC Chair Lina Khan emphasized the need for transparency, stating, “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 seeks information on four main aspects: the types of surveillance pricing products offered by each company, their data collection methods, customer and sales data, and the influence of these practices on the prices consumers ultimately pay.