The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their practices related to customer data usage, algorithms, and artificial intelligence in personalizing pricing strategies.
The FTC has issued orders to eight companies—Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros—requesting information about how these pricing strategies affect privacy, competition, and consumer protections.
Businesses are utilizing data tools such as artificial intelligence in a practice termed “surveillance pricing” or “dynamic pricing,” which allows them to present varying prices for identical products based on specific consumer traits or behaviors. Factors influencing these prices may include a customer’s location, demographics, credit history, and their browsing or shopping history.
Many of the firms under investigation provide transaction, sales, and pricing services to some of the largest corporations both in the United States and globally. Task Software manages transactions for major hospitality brands, including McDonald’s and Starbucks. Revionics supplies retail price optimization software and analytical services to various global chains, including Home Depot. Pros, which markets itself as a provider of AI-driven pricing solutions, counts companies like Nestlé, HP, and United Airlines among its clientele and collaborates with Microsoft on technology development.
The FTC aims to clarify the complexities of this “opaque market,” where consumers are categorized, and targeted pricing strategies are employed.
“Firms that collect personal data from Americans pose risks to individuals’ privacy. These firms may be using this vast array of personal information to impose higher prices on consumers,” stated FTC Chair Lina Khan. “Americans have the right to understand if businesses are utilizing personal data for surveillance pricing, and the FTC’s investigation will illuminate the obscure practices of pricing intermediaries.”
The FTC is seeking information in four primary areas: the types of surveillance pricing services offered by each company, their data collection methods, customer and sales information, and the influence of these practices on the final prices consumers pay.