The Federal Trade Commission (FTC) has initiated an investigation into several prominent corporations regarding their practices of utilizing customer data, algorithms, and artificial intelligence to customize pricing for individual consumers.
Eight companies from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received information requests from the regulatory body. This inquiry aims to evaluate the implications of such pricing strategies on privacy, competition, and consumer protection.
These firms employ techniques known as “surveillance pricing” or “dynamic pricing,” which allow them to display varying prices for the same products to different consumers based on unique traits such as location, demographics, credit history, as well as online shopping behaviors.
Many of the businesses involved are significant players in the transaction, sales, and pricing services market, catering to major U.S. and international firms. Task Software, for instance, manages transactions for notable hospitality entities like McDonald’s and Starbucks. Revionics offers retail price optimization software and pricing analytics to renowned chains, including Home Depot. Pros, a company recognized for its AI-driven pricing solutions, serves clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC aims to clarify the situation in this “opaque market,” which classifies consumers and implements targeted pricing for various goods and services.
FTC Chair Lina Khan stated, “Companies that collect Americans’ personal data can jeopardize individual privacy. Now, these companies could be taking advantage of extensive personal information to impose higher prices. Americans need to understand whether their detailed consumer data is being used for surveillance pricing, and the FTC’s investigation will bring awareness to this unclear landscape of pricing intermediaries.”
The FTC is seeking information in four primary areas: the nature of surveillance pricing products and services each firm provides; their data collection methods; customer and sales data; and the extent to which these surveillance techniques impact the final prices customers pay.