The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their practices involving customer data, algorithms, and artificial intelligence to personalize pricing for individual consumers.
Eight companies from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have been issued information requests by the FTC. The agency aims to assess the implications of these pricing strategies on privacy, competition, and consumer rights.
These firms use technological tools, notably AI, to engage in what is referred to as “surveillance pricing” or “dynamic pricing.” This method enables businesses to offer varying prices to different consumers for the same items based on several factors, including geographic location, demographics, credit scores, and online shopping habits.
Most of the companies involved provide transaction, sales, and pricing solutions to some of the largest organizations in the United States and worldwide. Notably, Task Software supports major hospitality brands, including McDonald’s and Starbucks. Revionics is known for its retail price optimization services utilized by global retailers, such as Home Depot. Pros offers AI-driven pricing solutions, serving clients like Nestlé, HP, and United Airlines, and is also partnered with Microsoft for technology development.
The FTC seeks to clarify the workings of what it describes as an “opaque market” that categorizes consumers and establishes targeted pricing for goods and services. FTC Chair Lina Khan stated, “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. 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 has outlined four main areas of interest in this investigation: the types of surveillance pricing services offered by each company; the methods of data collection; customer and sales data; and the impact of these surveillance practices on consumer pricing.