The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to customize pricing for individuals.
The investigation targets eight companies across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. Each firm has been ordered to provide information about the effects of their pricing strategies on privacy, competition, and consumer protection.
Many businesses have been adopting a pricing strategy known as “surveillance pricing,” also referred to as “dynamic pricing,” which allows them to display different prices for identical products based on specific consumer characteristics or behaviors. Factors influencing these pricing differences can include a shopper’s location, demographic information, credit history, and past browsing or purchase history.
The contacted companies play significant roles in transaction, sales, and pricing services for major U.S. and global firms. Notably, Task Software is associated with major hospitality brands such as McDonald’s and Starbucks, while Revionics offers retail pricing optimization tools to global companies like Home Depot. Pros, a software enterprise promoting AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clientele and partners with Microsoft in technology development.
The FTC aims to explore the complexities of this “opaque market,” which involves categorizing shoppers and implementing targeted pricing strategies.
FTC Chair Lina Khan stated, “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. 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 agency is particularly interested in four main areas: the types of surveillance pricing products and services offered by each company; the methods of data collection; customer and sales information; and the ways these surveillance practices affect the prices consumers ultimately pay.