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.
Eight companies from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have been ordered by the FTC to provide information about how these pricing practices affect privacy, competition, and consumer protection.
These firms utilize data tools, commonly referred to as “surveillance pricing” or “dynamic pricing,” which allows them to present different prices to consumers based on specific characteristics or behaviors. Factors influencing these prices may include a consumer’s location, demographics, credit history, and online shopping behavior.
Many of the firms involved provide vital transaction, sales, and pricing services to large corporations both in the U.S. and internationally. Task Software, for instance, manages transactions for several major hospitality companies, such as McDonald’s and Starbucks. Revionics specializes in retail price optimization and supplies pricing analytics to notable global chains, including Home Depot. Pros, which emphasizes its AI-driven solutions for pricing, has clients such as Nestlé, HP, and United Airlines, and partners with Microsoft for technology development.
The FTC aims to clarify this “opaque market” where shoppers are categorized and targeted with specific pricing for products and services.
“Companies that gather personal data from Americans can jeopardize individual privacy. They may also be using this extensive personal information to charge higher prices,” stated FTC Chair Lina Khan. “Americans have the right to know if businesses are employing detailed consumer data for surveillance pricing, and this inquiry will illuminate the obscure network of pricing intermediaries.”
The FTC has outlined four primary areas for investigation: the nature of the surveillance pricing products and services offered by each company, methods of data collection, customer and sales information, and how these surveillance tactics affect the pricing consumers ultimately face.