The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence for customized pricing strategies.
Eight companies from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received inquiries from the FTC on Tuesday. The agency aims to understand the implications of these pricing practices on privacy, competition, and consumer protection.
These firms utilize data-driven strategies often referred to as “surveillance pricing” or “dynamic pricing,” which allow them to present varying prices for identical products based on individual consumer characteristics and behaviors. Factors influencing this include location, demographics, credit history, and online shopping habits.
Many of the companies under investigation play significant roles in the transaction and pricing ecosystem, servicing some of the largest corporations in the U.S. and worldwide. For instance, Task Software manages transactions for major hospitality brands like McDonald’s and Starbucks, while Revionics specializes in retail price optimization and serves global retailers like Home Depot. Pros, which offers AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clients and partners with Microsoft for technology development.
The FTC is seeking to unveil the complexities of this “opaque market,” which categorizes consumers and assigns targeted pricing based on collected data.
“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,” remarked FTC Chair Lina Khan. She emphasized that consumers deserve to be informed about whether businesses are leveraging detailed personal data to implement surveillance pricing, and that the FTC’s investigation aims to clarify this murky pricing environment.
The commission will gather information on four main aspects: the types of surveillance pricing products and services each company provides, their data collection methods, customer and sales information, and how these practices impact the prices consumers pay.