The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to implement personalized pricing strategies.
The firms under scrutiny include Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC issued requests for information on Tuesday, seeking details about the effects of these pricing practices on privacy, competition, and consumer protection.
These companies utilize data-driven techniques, often referred to as “surveillance pricing” or “dynamic pricing,” which allows them to present varying prices for the same products based on individual consumer characteristics and behaviors. Factors such as location, demographics, credit history, and online shopping habits can influence pricing.
Many of the entities contacted by the FTC play a crucial role in providing transaction, sales, and pricing services for major corporations both in the U.S. and internationally. For instance, Task Software supports transaction management for significant hospitality brands, including McDonald’s and Starbucks. Revionics offers retail price optimization software to notable global retailers like Home Depot. Pros positions itself as a provider of AI-driven pricing solutions, serving clients such as Nestlé, HP, and United Airlines, and partners with Microsoft for technology development.
The FTC aims to clarify this “opaque market,” which categorizes consumers and assigns targeted prices for various goods and services. FTC Chair Lina Khan emphasized the importance of transparency, stating, “Firms that harvest Americans’ personal data can put people’s privacy at risk…Americans deserve to know whether businesses are using detailed consumer data to deploy surveillance pricing.”
The regulatory body is particularly interested in gathering information about four main areas: the types of surveillance pricing products and services offered by each company, data collection methods, customer and sales information, and the impact of these practices on consumer pricing.