The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to personalize pricing strategies.
The inquiry has identified eight firms from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. These companies have received requests for information from the FTC concerning how their pricing methods may affect privacy, competition, and consumer rights.
The practice under scrutiny, known as “surveillance pricing” or “dynamic pricing,” involves utilizing data tools to present different prices for the same products to different consumers based on factors such as location, demographics, credit history, and shopping behavior.
Many of the firms being investigated play significant roles in providing transaction, sales, and pricing solutions to some of the largest companies in the United States and worldwide. Task Software, for example, manages transactions for major hospitality brands including McDonald’s and Starbucks. Revionics offers pricing optimization software to various global retailers, including Home Depot. Additionally, Pros, which specializes in AI-driven pricing solutions, serves well-known clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft as a technology development partner.
The FTC aims to investigate this “opaque market” that profiles consumers and establishes targeted pricing for products and services.
FTC Chair Lina Khan emphasized the potential risks associated with the collection of personal data. “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,” she stated. “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 FTC is particularly interested in four areas of information: the types of surveillance pricing products and services offered by each company, data collection methods, customer and sales data, and the impact of these practices on the prices consumers ultimately pay.