The Federal Trade Commission (FTC) has initiated an investigation into several notable companies regarding their use of customer data, algorithms, and artificial intelligence (AI) for individualized pricing strategies.
On Tuesday, the FTC issued orders to eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking information about the implications of these pricing practices on privacy, competition, and consumer protection.
These companies are reportedly using data-driven methods, referred to as “surveillance pricing” or “dynamic pricing,” which allow them to present different prices to consumers for identical products, based on various characteristics such as location, demographics, credit history, and browsing or shopping habits.
Many of the firms under scrutiny by the FTC provide transaction, sales, and pricing services to some of the largest corporations in the United States and worldwide. Task Software, for instance, is known for managing transactions for major hospitality brands like McDonald’s and Starbucks. Revionics specializes in retail price optimization software and analytics, serving several global chains, including Home Depot. Additionally, Pros, an AI-driven pricing solutions provider, counts Nestlé, HP, and United Airlines as clients and collaborates with Microsoft for technology development.
The FTC aims to investigate this “opaque market” that profiles consumers and sets targeted prices for goods and services. FTC Chair Lina Khan stated, “Companies that collect Americans’ personal data risk individuals’ privacy. Now these firms could be leveraging this extensive personal information to impose higher prices. Americans need clarity on whether businesses are utilizing detailed consumer data for surveillance pricing, and the FTC’s inquiry will illuminate this shadowy pricing ecosystem.”
The agency is particularly interested in four critical areas: the types of surveillance pricing products and services each company provides; their data collection practices; customer and sales information; and the impact of these surveillance methods on the final prices consumers pay.