The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to customize pricing for consumers.
Among the companies under scrutiny are Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, who were issued orders on Tuesday to provide insights into how these pricing tactics impact privacy, competition, and consumer protection.
These companies utilize data-driven tools, including AI, to implement a strategy known as “surveillance pricing,” also referred to as “dynamic pricing.” This approach allows firms to offer varying prices for identical products based on specific consumer attributes such as location, demographics, credit history, and online shopping behavior.
Many of the firms contacted by the FTC play significant roles in transaction, sales, and pricing services for large corporations both in the U.S. and internationally. Task Software manages transactions for several major hospitality brands, including McDonald’s and Starbucks. Revionics offers pricing optimization software to several retail giants, like Home Depot. Pros, which positions itself as an AI-powered pricing solution provider, serves clients such as Nestlé, HP, and United Airlines, and partners with Microsoft for technology development.
The FTC aims to investigate the “opaque market” that identifies consumers and determines specific prices for products and services. FTC Chair Lina Khan emphasized the risk to consumer privacy, stating, “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 agency is specifically seeking information in four critical areas: the types of surveillance pricing products and services offered by each firm, their data collection methods, customer and sales data, and the effect of these practices on the prices consumers ultimately pay.