The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their utilization of customer data, algorithms, and artificial intelligence to implement personalized pricing strategies.
On Tuesday, the FTC issued orders to eight firms from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency seeks to gather information about how these pricing practices affect privacy, competition, and consumer protection.
Companies are employing tools such as AI for a practice known as “surveillance pricing” or “dynamic pricing,” which allows them to display varying prices for the same products based on consumer attributes. These attributes may include location, demographics, credit history, and online shopping behavior.
Many of the firms contacted by the FTC provide pricing, transaction, and sales services to leading companies in the U.S. and worldwide. Task Software manages transactions for several large hospitality brands, including McDonald’s and Starbucks. Revionics offers retail price optimization and pricing analytics to numerous global retail chains, such as Home Depot. Pros, which specializes in AI-powered pricing solutions, serves clients like Nestlé, HP, and United Airlines, and collaborates with Microsoft as a technology development partner.
The FTC aims to investigate this “opaque market” that categorizes consumers and assigns them targeted prices 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 is particularly focused on four areas: the types of surveillance pricing products and services offered by each company, data collection methods, customer and sales information, and the influence of these surveillance strategies on consumer pricing.