The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies concerning their use of customer data, algorithms, and artificial intelligence to customize pricing strategies.
On Tuesday, the FTC issued orders to eight firms across different sectors—Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros—seeking information on how these pricing practices affect privacy, competition, and consumer protection.
Utilizing data-driven tools, such as AI, companies engage in a method known as “surveillance pricing” or “dynamic pricing,” which allows them to display varying prices for the same products to different consumers based on their individual traits or behaviors. Factors influencing this may include location, demographics, credit history, and online shopping behavior.
Many of the firms under scrutiny offer transaction, sales, and pricing services to some of the largest businesses in the U.S. and worldwide. Task is known for its transaction management services for major hospitality brands like McDonald’s and Starbucks, while Revionics delivers retail price optimization software and analytics to global retailers, including Home Depot. Pros, which markets itself as a provider of AI-driven pricing solutions, serves clients like Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC aims to clarify this “opaque market” characterized by consumer categorization and targeted pricing for goods and services.
FTC Chair Lina Khan emphasized the potential risks associated with firms collecting Americans’ personal information. She stated, “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 commission is seeking information on four main areas: the types of surveillance pricing products and services offered by each company; their data collection methods; customer and sales data; and the way these surveillance practices impact the prices that customers ultimately pay.