The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding the utilization of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
On Tuesday, the regulatory agency issued information requests to eight firms from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC is seeking insights into how these pricing methods affect privacy, competition, and consumer protection.
Companies are implementing what is known as “surveillance pricing” or “dynamic pricing,” which involves displaying varying prices for the same products to different consumers according to their specific characteristics or behaviors. Factors such as location, demographic information, credit history, and online browsing or shopping habits can influence these tailored prices.
Many companies targeted by the FTC provide transaction, sales, and pricing services to major U.S. and international companies. For instance, Task Software supports numerous hospitality giants, including McDonald’s and Starbucks, while Revionics offers retail price optimization software to major retailers like Home Depot. Pros, which markets itself as an AI-driven pricing solution provider, counts Nestlé, HP, and United Airlines among its clientele, and it collaborates with Microsoft on technology development.
The FTC aims to address the complexities of this “opaque market,” which categorizes consumers and establishes targeted pricing structures for goods and services.
“Companies that gather Americans’ personal data could jeopardize individual privacy. Now, these firms might be using this extensive data to charge people higher prices,” stated FTC Chair Lina Khan. “Americans have the right to know if businesses are leveraging detailed consumer data to implement surveillance pricing, and the FTC’s investigation will expose this unclear framework involving pricing intermediaries.”
The FTC is specifically interested in four areas: the surveillance pricing products and services offered by each company, the methods of data collection, customer and sales information, and the impact of these practices on the pricing customers ultimately face.