The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their practices in utilizing customer data, algorithms, and artificial intelligence to customize pricing strategies.
On Tuesday, the agency issued inquiries to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency seeks to understand how these pricing strategies affect privacy, competition, and consumer protection.
These companies employ a strategy known as “surveillance pricing” or “dynamic pricing,” which allows them to present different prices to consumers for the same products based on individual characteristics or behaviors, such as location, demographics, credit history, and shopping habits.
Many of the targeted companies provide transaction, sales, and pricing services to some of the largest businesses in the U.S. and around the world. Task Software manages transactions for major hospitality brands, including McDonald’s and Starbucks, while Revionics offers retail price optimization tools to global retailers like Home Depot. Pros, which claims to provide AI-driven pricing solutions, has clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC aims to clarify the nature of this “opaque market” that categorizes consumers and determines targeted pricing for goods and services.
“Companies that collect Americans’ personal data can jeopardize individual privacy. They may be exploiting this extensive collection of information to impose higher prices,” asserted FTC Chair Lina Khan. “Americans have a right to know if businesses are utilizing detailed consumer data for surveillance pricing, and the FTC’s investigation will illuminate this obscure pricing landscape.”
The FTC is seeking detailed information in four primary areas: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales data, and the influence of these practices on the prices that consumers ultimately pay.