The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence to customize pricing for individual consumers.
Eight companies from various sectors—Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros—received requests from the regulatory agency on Tuesday. The FTC is seeking information about how these pricing strategies affect privacy, competition, and consumer protection.
These companies utilize data tools, including AI, to implement a practice known as “surveillance pricing,” or “dynamic pricing,” where different prices are presented to consumers based on individual characteristics and behaviors. Factors influencing pricing can include a customer’s location, demographics, credit history, and prior browsing or shopping activities.
Many of the firms examined by the FTC provide transaction, sales, and pricing services to leading businesses in the U.S. and around the globe. Task Software manages transactions for major hospitality chains like McDonald’s and Starbucks, while Revionics specializes in retail price optimization and has worked with businesses such as Home Depot. Pros, a software company that offers AI-based pricing solutions, serves notable clients including Nestlé, HP, and United Airlines. Pros also collaborates with Microsoft on technology development.
The FTC aims to explore the complexities of this “opaque market” that categorizes consumers and sets targeted prices for goods and services. In a statement, FTC Chair Lina Khan expressed concern, 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 particularly interested in four main areas: the types of surveillance pricing products and services each company provides, their data collection methods, customer and sales information, and the influence of these surveillance practices on the prices paid by consumers.