The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their usage of customer data, algorithms, and artificial intelligence to customize pricing for individuals.
Eight organizations, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have received requests from the agency seeking insights on how these pricing strategies impact privacy, competition, and consumer protection.
Companies have been utilizing data-driven methods, such as artificial intelligence, in a practice referred to as “surveillance pricing” or “dynamic pricing,” which allows them to offer different prices to consumers for identical products based on various factors such as location, demographics, credit history, and browsing or shopping behaviors.
Many of the firms under FTC scrutiny provide transaction, sales, and pricing solutions to major corporations in the U.S. and worldwide. Task Software manages transactions for major hospitality brands like McDonald’s and Starbucks. Revionics specializes in retail price optimization software for major retailers, including Home Depot. Pros, which claims to offer AI-driven pricing solutions, counts brands like Nestlé, HP, and United Airlines as clients and collaborates with Microsoft on technology development.
The FTC aims to clarify the complexities surrounding a “shadowy market” where shoppers are classified and targeted with specific prices for products and services. FTC Chair Lina Khan addressed the issue, 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 investigation will focus on four main areas: the types of surveillance pricing products and services offered by each company, how data is collected, relevant customer and sales data, and the influence of these practices on the final prices customers pay.