The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their usage of customer data, algorithms, and artificial intelligence to customize pricing for individual consumers.
The FTC has issued orders to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking insights into how these pricing strategies affect privacy, competition, and consumer protection.
These companies utilize data tools, often referred to as “surveillance pricing” or “dynamic pricing,” which allows them to present varying prices for identical products to different consumers based on specific characteristics or behaviors such as location, demographics, credit history, and online activity.
Many of the firms contacted by the FTC are involved in providing transaction, sales, and pricing services to prominent companies both in the U.S. and internationally. Task Software is associated with several major hospitality brands, including McDonald’s and Starbucks. Revionics offers retail price optimization software and analytics to global retailers like Home Depot. Pros markets itself as a provider of AI-driven pricing solutions and counts Nestlé, HP, and United Airlines among its clientele, along with ties to Microsoft.
The FTC aims to clarify this “opaque market,” which categorizes consumers and sets targeted prices for products and services.
FTC Chair Lina Khan emphasized the potential risks to privacy, stating, “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 commission is specifically seeking information on four key aspects: the types of surveillance pricing products and services available, methods of data collection, customer and sales data, and the influence of these practices on the final prices consumers pay.