The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
In a separate development, McDonald’s is facing its first lawsuit related to the E. coli outbreak associated with its Quarter Pounder.
The FTC has issued requests to eight companies across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency seeks to understand how these pricing practices affect privacy, competition, and consumer protections.
Many of the firms being investigated utilize data-driven techniques known as “surveillance pricing” or “dynamic pricing.” This approach allows companies to display different prices to consumers based on various factors, including location, demographics, credit history, and online behavior.
The companies contacted play significant roles in transaction management and pricing services for major corporations in the United States and worldwide. For instance, Task Software works with notable hospitality brands like McDonald’s and Starbucks, while Revionics supplies retail pricing solutions to global retailers such as Home Depot. Pros, which specializes in AI-powered pricing solutions, has clients that include Nestlé, HP, and United Airlines and collaborates with Microsoft on technology development.
The FTC aims to investigate what it terms an “opaque market” that allows for the categorization of consumers and the implementation of targeted pricing mechanisms.
FTC Chair Lina Khan commented, “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 agency is focusing on four critical areas: the types of surveillance pricing products and services offered by each company, data collection methods, customer and sales data, and the impact of these practices on customer pricing.