The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to personalize pricing strategies.
Eight firms from various industries, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received requests from the FTC on Tuesday. The regulatory agency aims to understand how these pricing practices impact consumer privacy, competition, and overall consumer protection.
These companies employ a technique referred to as “surveillance pricing” or “dynamic pricing,” which utilizes data tools such as AI to present different prices to consumers based on factors like location, demographics, credit history, and shopping behavior.
Many of the contacted firms provide essential transaction, sales, and pricing services to some of the largest corporations both in the U.S. and worldwide. For instance, Task Software is known for supporting major hospitality chains like McDonald’s and Starbucks, while Revionics offers retail price optimization tools and pricing analytics to brands like Home Depot. Pros, which markets itself as an AI-driven pricing solutions provider, counts Nestlé, HP, and United Airlines among its clientele and collaborates with Microsoft.
The FTC’s goal is to clarify the opaque market that enables companies to profile shoppers and establish targeted pricing for products and services. “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,” stated FTC Chair Lina Khan. She emphasized the necessity for consumers to understand whether their detailed data is being utilized for surveillance pricing practices, indicating that the inquiry will illuminate the complex network of pricing intermediaries.
The FTC is specifically seeking information in four crucial areas: the types of surveillance pricing products and services offered by each company; data collection methods; customer and sales data; and the impact of these surveillance practices on the prices charged to consumers.