The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their practices related to customer data, algorithms, and artificial intelligence in personalized pricing strategies.
On Tuesday, the FTC issued information requests to eight firms across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency is examining the implications of these pricing methods on privacy, competition, and consumer protection.
Companies utilizing advanced data tools, particularly AI, engage in a practice known as “surveillance pricing” or “dynamic pricing.” This approach allows them to display different prices to consumers for the same products, depending on factors like location, demographics, credit history, and online behavior.
Many of the firms involved provide pricing, sales, and transactional support to significant U.S. and international businesses. Task Software is recognized for its role in managing transactions for major hospitality brands such as McDonald’s and Starbucks. Revionics offers retail price optimization software to global chains, including Home Depot, while Pros, which focuses on AI solutions for pricing, caters to clients like Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC aims to clarify the workings of this “opaque market” that identifies shoppers and sets targeted prices for products and services.
FTC Chair Lina Khan emphasized the potential risks associated with companies collecting personal data, 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.” She added that Americans deserve transparency about whether businesses are employing detailed consumer data for surveillance pricing and that the FTC’s inquiry hopes to unveil this complex pricing ecosystem.
The FTC is specifically seeking insights into four areas: the types of surveillance pricing products and services offered by each company, data collection methods, customer and sales information, and the influence of these surveillance practices on consumer pricing.