The Federal Trade Commission (FTC) has initiated an investigation involving several major companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing.
The FTC has issued inquiries to eight firms across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency is seeking to understand the implications of these pricing strategies concerning privacy, competition, and consumer protection.
These companies utilize data tools in a practice commonly referred to as “surveillance pricing,” or “dynamic pricing,” where differing prices are presented to consumers for the same products based on factors such as location, demographics, credit history, and past shopping behaviors.
Many of the firms contacted by the FTC provide transaction, sales, and pricing solutions for some of the largest corporations in the U.S. and internationally. Task Software manages transactions for notable hospitality brands like McDonald’s and Starbucks, while Revionics offers retail price optimization tools to major chains like Home Depot. Additionally, Pros, which specializes in AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clients and collaborates with Microsoft as a technology partner.
The FTC aims to uncover the complexities of the market that sorts customers and tailors prices for goods and services.
“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,” stated FTC Chair Lina Khan. “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 seeking information in four primary areas: the types of surveillance pricing products and services provided by each company; data collection methods; customer and sales information; and the impact of these practices on the prices consumers ultimately pay.