The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to personalize pricing for individuals.
The companies targeted in this investigation include Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC issued inquiries to these firms on Tuesday, seeking information on how such pricing practices affect privacy, competition, and consumer protection.
These companies are utilizing data-driven technologies, such as AI, to implement a practice known as “surveillance pricing” or “dynamic pricing.” This method allows firms to display varied prices for the same products to different consumers, depending on various factors such as location, demographics, credit history, and browsing or shopping behaviors.
Many of the companies involved provide essential transaction, sales, and pricing services to large corporations in the U.S. and around the world. Task Software manages transactions for prominent hospitality brands, including McDonald’s and Starbucks. Revionics offers retail price optimization software to major retailers like Home Depot, while Pros, known for its AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clientele. Pros also collaborates with Microsoft to develop technology solutions.
The FTC aims to investigate this “opaque market,” which categorizes consumers and sets targeted prices for various products 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 use 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 specifically seeking information on four crucial areas: the types of surveillance pricing products and services offered by each company, data collection methods, customer and sales information, and the impact of these practices on pricing for consumers.