The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their practices related to customer data utilization, algorithms, and artificial intelligence aimed at personalized pricing.
On Tuesday, the agency issued orders to eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The investigation seeks to uncover how these pricing strategies affect privacy, competition, and consumer protection.
These companies utilize advanced data tools, such as artificial intelligence, to implement what is known as “surveillance pricing” or “dynamic pricing.” This practice allows businesses to present varying prices for the same products to different consumers based on specific factors including location, demographics, credit history, and browsing or shopping behaviors.
Many of the firms targeted by the FTC are integral in providing transaction, sales, and pricing services to numerous well-known corporations both in the U.S. and internationally. For instance, Task Software is a key transaction management provider for major hospitality brands like McDonald’s and Starbucks. Revionics offers retail price optimization software and analytics to large retail chains, including Home Depot. Pros markets itself as a supplier of AI-driven pricing solutions and counts Nestlé, HP, and United Airlines as clients, while also partnering with Microsoft for technology development.
The FTC aims to clarify the workings of this “opaque market” that categorically profiles shoppers and applies targeted pricing for various products and services.
“Businesses that collect personal data from Americans can jeopardize their privacy. They might be exploiting this significant amount of personal information to impose higher prices,” stated FTC Chair Lina Khan. “Consumers have the right to know if companies are using detailed data to implement surveillance pricing, and our inquiry will expose this obscure network of pricing intermediaries.”
The FTC is seeking information on four main aspects: the types of surveillance pricing services offered by each company; their data collection methods; customer and sales information; and the effects of these practices on the prices consumers pay.