The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their usage of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
The investigation is focusing on eight firms from various sectors: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. These companies were ordered to provide information about how their pricing practices affect privacy, competition, and consumer protection.
These companies utilize data-driven tools, including artificial intelligence, to implement a practice termed “surveillance pricing” or “dynamic pricing.” This method enables them to present distinct prices to consumers for identical products based on individual attributes such as location, demographics, credit history, and browsing or shopping habits.
Many of the firms examined by the FTC offer transaction, sales, and pricing services to some of the largest businesses in the United States and internationally. Task Software facilitates transaction management for major hospitality corporations, including McDonald’s and Starbucks. Revionics specializes in retail price optimization software and pricing analytics for numerous global retailers, such as Home Depot. Pros, which provides AI-enhanced pricing solutions, counts Nestlé, HP, and United Airlines among its clientele, and is also a technology development partner with Microsoft.
The FTC aims to uncover the workings of this “opaque market” that categorizes consumers and establishes targeted pricing for goods and services.
“Companies that collect Americans’ personal data can jeopardize people’s privacy. Now, these companies could be using this extensive array of personal information to impose higher prices,” stated FTC Chair Lina Khan. “Americans deserve clarity on whether businesses are utilizing detailed consumer data to implement surveillance pricing, and this inquiry will illuminate the hidden ecosystem of pricing intermediaries.”
The FTC is seeking information regarding four specific 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 surveillance practices on the prices consumers ultimately pay.