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 on an individual basis.
The FTC has ordered eight companies across various industries—Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros—to provide information on how these pricing strategies affect privacy, competition, and consumer protection.
Utilizing data tools and AI, these firms practice what is known as “surveillance pricing” or “dynamic pricing,” which involves displaying different prices for the same products based on individual consumer attributes such as location, demographics, credit history, and shopping habits.
Many of the firms under scrutiny offer transaction, sales, and pricing services to some of the largest companies both in the U.S. and globally. For instance, Task is the transaction management entity serving major hospitality brands like McDonald’s and Starbucks. Revionics specializes in retail price optimization software for global chains such as Home Depot, while Pros, which promotes AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clientele. Pros also collaborates with Microsoft on technology developments.
The FTC aims to clarify the workings of this “opaque market,” where shoppers are categorized and targeted with specific prices for products and services.
“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,” FTC Chair Lina Khan stated. “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 FTC is seeking information in four main areas: the types of surveillance pricing services offered by each company; their data collection methods; customer and sales data; and the impact of these surveillance practices on the prices customers ultimately pay.