The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
Eight companies from various industries, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have received information requests from the FTC. The agency seeks insights into how these pricing methods affect privacy, competition, and consumer protection.
Companies are employing a technique known as “surveillance pricing,” or “dynamic pricing,” which involves displaying varying prices for the same products based on customer characteristics such as location, demographics, credit history, and online behavior.
Many of the firms approached by the FTC play a critical role in transaction, sales, and pricing services for some of the largest companies in the United States and worldwide. Task Software, for instance, handles transaction management for major hospitality brands like McDonald’s and Starbucks. Revionics specializes in retail price optimization and analytics, servicing several multinational retailers, including Home Depot. The software company Pros markets itself as an AI-driven solution provider for pricing, with notable clients such as Nestlé, HP, and United Airlines, and is a technology partner with Microsoft.
The FTC aims to clarify this “opaque market” that categorizes consumers and adopts targeted pricing models for various goods and services.
“Companies that gather Americans’ personal data can compromise individuals’ privacy. Now, these firms may be leveraging this extensive collection of personal information to impose higher prices,” stated FTC Chair Lina Khan. “Americans have the right to understand if businesses are utilizing detailed consumer data for surveillance pricing, and the FTC’s inquiry will illuminate this obscure network of pricing intermediaries.”
The FTC is requesting detailed information on four primary aspects: the types of surveillance pricing products and services offered by each company; methods of data collection; customer and sales information; and the impact of these practices on the prices consumers pay.