FTC Probes Companies Over Controversial Surveillance Pricing Practices

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The Federal Trade Commission (FTC) has initiated an investigation targeting several prominent companies regarding their methods of utilizing customer data, algorithms, and artificial intelligence to customize pricing strategies.

McDonald’s is currently facing its first lawsuit related to the E. coli outbreak associated with its Quarter Pounder burger.

The FTC issued information requests to eight firms across various sectors: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency seeks to understand the implications of pricing practices on privacy, competition, and consumer protection.

These companies engage in a practice often referred to as “surveillance pricing” or “dynamic pricing,” which allows them to present distinct prices to consumers for identical products based on individual characteristics or behaviors. Factors such as location, demographics, credit history, and browsing or shopping habits can influence the prices displayed.

Many of the investigated companies provide transaction, sales, and pricing services to some of the largest firms domestically and internationally. Task Software, for instance, manages transactions for major hospitality chains like McDonald’s and Starbucks. Revionics specializes in retail price optimization and serves several global chains, including Home Depot. Pros, known for its AI-powered pricing solutions, counts Nestlé, HP, and United Airlines among its clients and collaborates with Microsoft as a technology development partner.

The FTC aims to investigate this complex market that identifies consumers and sets targeted pricing for products and services.

“Companies that collect Americans’ personal data may jeopardize their privacy. There’s a possibility that these companies are misusing this extensive data to impose higher prices,” stated FTC Chair Lina Khan. “Americans have the right to know if businesses are utilizing detailed consumer data for surveillance pricing, and this inquiry will provide insight into this obscure pricing ecosystem.”

The FTC is specifically seeking information in four primary areas: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales information, and how these practices impact the prices customers ultimately pay.

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