The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
The regulatory agency issued information requests to eight firms spanning various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. This inquiry aims to assess the implications of such pricing practices on privacy, competition, and consumer protection.
Companies utilize data tools, including AI, to implement a concept known as “surveillance pricing” or “dynamic pricing,” which allows them to display different prices for the same products based on individual consumer traits and behaviors. Factors such as location, demographics, credit history, and online shopping behaviors can determine these tailored prices.
Many of the firms approached by the FTC assist major U.S. and global companies with transaction, sales, and pricing services. Task Software is notable for managing transactions for key players in hospitality, such as McDonald’s and Starbucks. Revionics offers price optimization software and analytics to leading retailers like Home Depot. Pros, which claims to provide AI-driven pricing solutions, services clients including Nestlé, HP, and United Airlines, while also collaborating with Microsoft on technology development.
The FTC aims to clarify the complexities of this “opaque market” that segments consumers and assigns targeted pricing to various goods and services.
“Firms that harvest Americans’ personal data can jeopardize privacy. Now companies might be using this substantial amount of personal information to charge higher prices,” stated FTC Chair Lina Khan. “Americans need visibility into whether businesses are employing detailed consumer data for surveillance pricing, and the FTC’s investigation will illuminate this obscure network of pricing intermediaries.”
The agency is seeking information in four main areas: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales data, and the ways these practices affect the prices that consumers ultimately pay.