The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence to personalize pricing.
Eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received requests from the FTC on Tuesday, seeking details about how these pricing strategies may affect privacy, competition, and consumer safeguards.
These companies utilize data-driven tools, such as artificial intelligence, to implement a practice called “surveillance pricing” or “dynamic pricing.” This approach allows them to display different prices for the same products, tailored to individual consumers based on various factors like location, demographics, credit history, and purchase behavior.
Many of the firms under investigation play crucial roles in providing transaction, sales, and pricing services for some of the largest corporations in the U.S. and worldwide. Task Software manages transactions for significant hospitality brands, including McDonald’s and Starbucks, while Revionics specializes in retail price optimization software used by global retailers like Home Depot. Pros, which positions itself as a provider of AI-driven pricing solutions, serves clients such as Nestlé, HP, and United Airlines and collaborates with Microsoft for technology development.
The FTC aims to clarify the complexities of this “opaque market,” which involves categorizing consumers and implementing targeted pricing strategies.
FTC Chair Lina Khan highlighted concerns regarding the risks to consumer privacy linked to companies collecting personal information to potentially charge higher prices. She stated, “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 is particularly interested in four main aspects: the types of surveillance pricing services each company offers, their data collection methods, relevant customer and sales information, and how these practices affect the final prices consumers pay.