The Federal Trade Commission (FTC) has initiated an inquiry into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to implement personalized pricing strategies.
Eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have been ordered by the FTC to provide information on how their pricing practices affect privacy, competition, and consumer welfare.
These companies utilize data-driven methodologies, often referred to as “surveillance pricing” or “dynamic pricing,” which allows them to present varying prices for identical products based on individual consumer characteristics such as location, demographics, credit history, and shopping behavior.
Many of the firms under scrutiny supply transaction, sales, and pricing services to major businesses both in the U.S. and internationally. For instance, Task Software supports various renowned hospitality brands, including McDonald’s and Starbucks. Revionics provides pricing optimization software and analytics to retail giants like Home Depot. Pros markets itself as an AI-driven pricing solution provider, serving clients like Nestlé, HP, and United Airlines, and is also partnered with Microsoft for technology development.
The FTC aims to clarify the complexities of what it describes as an “opaque market” in which businesses classify consumers and set tailored prices for goods and services.
FTC Chair Lina Khan emphasized the concern over privacy risks associated with companies accumulating personal data, suggesting that this information could lead to inflated prices for consumers. 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 commission is seeking insight into four primary areas: the types of surveillance pricing products and services provided by each company; data collection methods; customer and sales information; and the impact of these surveillance techniques on the final prices consumers pay.