The Federal Trade Commission (FTC) has initiated an investigation into several major corporations regarding their use of customer data, algorithms, and artificial intelligence to customize pricing for individual consumers.
On Tuesday, the regulatory body issued requests for information to eight companies across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC aims to assess the implications of these pricing strategies on privacy, competition, and consumer protection.
These companies are utilizing data-driven techniques, often referred to as “surveillance pricing” or “dynamic pricing,” which allows them to present varying prices for identical goods based on consumer-specific factors such as location, demographics, credit history, and online behavior.
Many of the firms investigated play a significant role in providing transaction, sales, and pricing solutions to some of the largest corporations in the United States and worldwide. For instance, Task Software manages transactions for major hospitality chains, including McDonald’s and Starbucks, while Revionics offers retail price optimization software and analytics to prominent retailers like Home Depot. Additionally, Pros, a company that claims to provide AI-driven pricing solutions, has clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft as a technology partner.
The FTC intends to uncover the details behind what it describes as an “opaque market” that categorizes consumers and assigns targeted prices for products and services.
“Companies that gather Americans’ personal information can jeopardize individuals’ privacy. Furthermore, these firms may be taking advantage of this extensive personal data to charge higher prices,” stated FTC Chair Lina Khan. “Americans have the right to understand whether their detailed consumer data is being used for surveillance pricing, and the FTC’s inquiry will clarify the obscure ecosystem surrounding pricing intermediaries.”
The commission is particularly focused on four main aspects: the types of surveillance pricing products and services provided by each company; their data collection methods; customer and sales information; and how these practices affect the prices customers ultimately pay.