The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence in personalized pricing strategies. Eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have been issued orders by the FTC to provide information on how these practices impact privacy, competition, and consumer protection.
These companies utilize data tools and a practice known as “surveillance pricing,” also referred to as “dynamic pricing,” which allows them to present different prices to consumers for identical products based on various factors such as location, demographics, credit history, and browsing or shopping activities.
Many of the FTC-ordered companies offer transaction, sales, and pricing services to some of the largest firms in the U.S. and worldwide. For instance, Task Software is linked to numerous major hospitality brands, including McDonald’s and Starbucks, while Revionics provides retail price optimization software to several global retailers such as Home Depot. Pros, which positions itself as a provider of AI-driven pricing solutions, serves clients including Nestlé, HP, and United Airlines. Pros is also noted as a technology development partner of Microsoft.
The FTC aims to uncover the complexities of this “opaque market” where consumers are categorized, resulting in targeted pricing for products 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 regulatory agency is particularly interested in 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 practices on the prices charged to consumers.