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.
The inquiry involves eight firms from various sectors: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. On Tuesday, the FTC issued orders to these companies, seeking information about how their pricing practices affect privacy, competition, and consumer protection.
Companies leverage data tools, including AI, to implement a method known as “surveillance pricing,” also referred to as “dynamic pricing.” This strategy involves offering different prices for the same products based on individual consumer characteristics or behaviors, such as location, demographics, credit history, and online activity.
Many of the firms approached by the FTC provide transaction, sales, and pricing services to some of the largest corporations in the U.S. and around the world. For instance, Task Software supports several major hospitality businesses like McDonald’s and Starbucks, while Revionics offers retail price optimization software and analytics to global chains such as Home Depot. Additionally, Pros, which specializes in AI-driven pricing solutions, serves clients including Nestlé, HP, and United Airlines, and partners with Microsoft for technology development.
The FTC aims to clarify the workings of this “opaque market” that classifies consumers and dictates targeted pricing for goods and services. FTC Chair Lina Khan stated, “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 investigation focuses on four primary areas: the types of surveillance pricing products and services provided by each company, the methods of data collection, customer and sales information, and how these practices impact the prices consumers pay.