The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
On Tuesday, eight firms—Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros—received requests from the FTC for information on how these pricing methods impact privacy, competition, and consumer protection.
Companies are employing techniques referred to as “surveillance pricing,” also known as “dynamic pricing,” which allows them to display varying prices for the same products based on consumers’ specific characteristics or behaviors. Factors influencing these price changes can include customer’s location, demographics, credit history, as well as transaction and browsing history.
The firms under scrutiny by the FTC provide various transaction, sales, and pricing services to some of the largest corporations both in the U.S. and internationally. Task Software manages transactions for major hospitality brands like McDonald’s and Starbucks, while Revionics supplies retail price optimization and analytics to companies such as Home Depot. Pros, known for its AI-driven pricing solutions, serves clients including Nestlé, HP, and United Airlines, and collaborates with Microsoft in technology development.
The FTC aims to investigate this increasingly “opaque market” that segments consumers and assigns them targeted prices based on their data.
“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,” stated FTC Chair Lina Khan. “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 FTC’s investigation focuses on four main areas: the types of surveillance pricing products and services offered by each company, data collection methods, customer and sales information, and the effect of these pricing practices on the prices consumers ultimately pay.