The Federal Trade Commission (FTC) has initiated an investigation into several major corporations concerning their use of customer data, algorithms, and artificial intelligence to personalize pricing strategies.
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The FTC sent orders to eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, to gather insights on how these pricing methods affect privacy, competition, and consumer protection.
These companies utilize data tools to employ a pricing strategy known as “surveillance pricing” or “dynamic pricing,” which offers different prices for the same products based on consumer characteristics or behavior such as location, demographics, credit history, and online activity.
Many of the firms targeted by the FTC provide pricing and sales services to prominent companies both in the United States and internationally. Task Software is known for its transaction management services for leading hospitality brands such as McDonald’s and Starbucks. Revionics supplies retail price optimization software to major retailers like Home Depot. Additionally, Pros, which specializes in AI-driven pricing solutions, has notable clients including Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC aims to clarify the “opaque market” that assesses shoppers and establishes targeted pricing for different products and services.
FTC Chair Lina Khan emphasized the risks associated with companies collecting Americans’ personal data, stating that there are concerns about potential exploitation of this information leading to increased prices for consumers. The investigation aims to uncover how detailed consumer data may be used in surveillance pricing and to expose the complexities of this pricing model.
The FTC is seeking information in four essential areas: the types of surveillance pricing services offered by each firm, their data collection methods, sales and customer data, and how these practices affect the pricing consumers ultimately pay.