The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their practices of utilizing customer data, algorithms, and artificial intelligence to create tailored pricing strategies.
On Tuesday, the regulatory agency issued inquiries to eight firms across various industries: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC is seeking information about how these pricing practices affect privacy, competition, and consumer protection.
These companies are known to employ data-driven tools, such as AI, to implement what is often referred to as “surveillance pricing” or “dynamic pricing,” which allows them to display varying prices for identical products based on consumer traits or behaviors. Factors influencing these price variations may include a customer’s location, demographic information, credit history, and past browsing or shopping behavior.
The firms contacted by the FTC primarily provide transaction, sales, and pricing services to some of the largest corporations in the United States and around the globe. Task Software, for instance, manages transactions for well-known hospitality brands like McDonald’s and Starbucks. Revionics specializes in retail price optimization and analytics for major chains such as Home Depot. Meanwhile, Pros claims to deliver AI-driven pricing solutions and counts Nestlé, HP, and United Airlines among its clientele, in addition to being a technology partner for Microsoft.
The FTC aims to unravel the complexities of this “opaque market,” which categorizes shoppers and sets targeted prices for various products and services.
According to FTC Chair Lina Khan, “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 inquiry seeks insight into four crucial areas: the types of surveillance pricing products and services offered by each company; their data collection methods; customer and sales data; and how these surveillance practices affect the pricing customers ultimately pay.