The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
On Tuesday, the FTC issued information requests to eight firms — including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros — aiming to understand how these practices affect privacy, competition, and consumer protection.
These companies utilize data-driven tools, such as artificial intelligence, to implement what is known as “surveillance pricing,” also referred to as “dynamic pricing.” This approach allows businesses to present different prices for the same products based on consumer attributes and behaviors, which can include location, demographics, credit history, and online activity.
Many of the firms targeted by the FTC provide vital transaction, sales, and pricing services to leading corporations both nationally and internationally. For instance, Task Software supports transactions for major hospitality brands like McDonald’s and Starbucks, while Revionics specializes in retail price optimization and analytics for companies such as Home Depot. Pros, which claims to offer AI-driven pricing solutions, counts notable corporations including Nestlé, HP, and United Airlines among its clientele and is also partnered with Microsoft for technology development.
The FTC is seeking to uncover the complexities of an “opaque market” that utilizes consumer data to set targeted pricing for products and services.
“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,” stated FTC Chair Lina Khan. “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 main areas: the types of surveillance pricing solutions offered by each firm, their data collection methods, customer and sales information, and the impact of these practices on the final prices consumers pay.