The Federal Trade Commission (FTC) has initiated an inquiry into several prominent companies concerning their use of customer data, algorithms, and artificial intelligence to customize pricing strategies.
The FTC issued information requests to eight companies spanning different sectors: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency aims to investigate how these pricing methods may impact privacy, competition, and consumer rights.
Companies utilize data analytics, including AI, to engage in practices termed “surveillance pricing” or “dynamic pricing.” This approach allows them to present different prices to various consumers for the same products, which can be influenced by factors such as location, demographics, credit history, and previous shopping behavior.
Many of the firms targeted by the FTC offer transaction and pricing services to major corporations both in the United States and internationally. Task Software is known for managing transactions for well-known hospitality brands like McDonald’s and Starbucks. Revionics delivers pricing optimization software and analytics to several global retailers, including Home Depot. Pros claims to provide AI-driven pricing solutions and serves clients like Nestlé, HP, and United Airlines, while also collaborating with Microsoft on technology development.
The FTC aims to clarify the complexities of a market that categorizes consumers and sets individualized prices for goods and services.
FTC Chair Lina Khan emphasized the risks associated with the collection of personal data, 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 areas: the types of surveillance pricing products and services offered, data collection methods, customer and sales data, and how these surveillance practices impact the prices customers pay.