The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence in personalized pricing strategies.
Eight companies from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have received information requests from the FTC. The agency seeks to understand how these pricing practices affect privacy, competition, and consumer protection.
These companies utilize data tools to implement a pricing strategy known as “surveillance pricing” or “dynamic pricing,” which involves displaying different prices to consumers for the same products based on individual characteristics or behaviors, such as location, demographics, credit history, and online activity.
The firms scrutinized by the FTC play significant roles in sales, transaction, and pricing services for numerous prominent businesses across the U.S. and internationally. Task Software manages transactions for major hospitality brands, including McDonald’s and Starbucks. Revionics offers retail price optimization and analytics to global retailers like Home Depot. Additionally, Pros, a firm that specializes in AI-driven pricing solutions, serves clients such as Nestlé, HP, and United Airlines, and partners with Microsoft on technology development.
The FTC aims to delve into what it describes as an “opaque market” that targets consumers and sets individualized prices for products and services. FTC Chair Lina Khan highlighted concerns about the potential exploitation of personal data for higher pricing, stating, “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 specifically seeking information on four critical aspects: the types of surveillance pricing services offered by each company, data collection methods, customer and sales data, and the impact of these practices on consumer pricing.