The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
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The FTC has issued orders to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking information on how their pricing practices affect privacy, competition, and consumer protection.
These companies employ methods known as “surveillance pricing” or “dynamic pricing,” which involve presenting different prices for the same products based on various consumer attributes such as location, demographics, credit history, and online browsing or shopping behavior.
Many of the contacted firms offer transaction, sales, and pricing services to some of the largest companies in the U.S. and worldwide. Task Software manages transactions for major hospitality clients like McDonald’s and Starbucks, while Revionics supplies retail price optimization tools for chains such as Home Depot. Pros, known for its AI-driven pricing solutions, works with clients including Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC aims to investigate the “opaque market” that enables the categorization of shoppers and the setting of targeted prices for products and services.
“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,” stated FTC Chair Lina Khan. She highlighted the importance of understanding whether businesses are utilizing consumer data for surveillance pricing and emphasized that the inquiry is intended to clarify the hidden dynamics of pricing intermediaries.
The FTC’s investigation will focus on four main areas: the types of surveillance pricing products and services offered, data collection methods, customer and sales information, and the influence of these practices on the final prices charged to consumers.