The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their practices related to customer data, algorithms, and artificial intelligence in relation to personalized pricing strategies.
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The FTC has issued orders to eight firms — Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros — seeking details about how their pricing strategies impact privacy, competition, and consumer protection.
These companies utilize data tools such as artificial intelligence to implement a practice referred to as “surveillance pricing” or “dynamic pricing,” where different prices for the same products are presented to consumers based on their specific characteristics or behaviors, which can include factors like location, demographics, credit history, and online shopping habits.
Many of the firms identified in the investigation provide transaction, sales, and pricing solutions to major corporations both in the U.S. and globally. For instance, Task Software supports significant hospitality chains like McDonald’s and Starbucks, while Revionics offers retail price optimization and analytics to large organizations including Home Depot. Pros is recognized for its AI-driven pricing solutions and counts clients such as Nestlé, HP, and United Airlines, in addition to its collaboration with Microsoft.
The FTC aims to unravel the complexities of this “opaque market,” where consumers are categorized and charged differential prices based on targeted pricing models.
FTC Chair Lina Khan commented on the investigation, 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 FTC’s investigation will focus on four main areas: the types of surveillance pricing products and services provided by these firms, their data collection methods, customer and sales information, and the influence of these practices on consumer pricing.