The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence (AI) to implement personalized pricing strategies.
The FTC has issued requests to eight firms across different sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking details on how these pricing tactics affect consumer privacy, competition, and protection.
Companies are engaging in a practice termed “surveillance pricing” or “dynamic pricing,” where they display varied prices for identical products based on factors such as customer characteristics and behaviors, including location, demographics, credit history, and shopping habits.
Many of the firms involved provide transaction, sales, and pricing services to prominent businesses both in the U.S. and globally. Task Software is known for its transaction management services to major hospitality brands like McDonald’s and Starbucks, while Revionics offers retail price optimization tools to major retailers, including Home Depot. Pros specializes in AI-driven pricing solutions and serves notable clients like Nestlé, HP, and United Airlines, in addition to collaborating with Microsoft as a technology partner.
The FTC aims to clarify what it describes as an “opaque market” where shoppers are categorized, leading to targeted pricing for products and services.
FTC Chair Lina Khan emphasized the importance of the investigation, 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 FTC’s investigation will focus on four main areas: the types of surveillance pricing products and services offered by each company, data collection methods, customer and sales information, and the impact of these surveillance practices on the prices consumers ultimately pay.