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.
On Tuesday, the regulatory body sent requests for information to eight firms across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC seeks to understand how these pricing practices affect consumer privacy, competition, and protection.
Companies utilize data-driven techniques such as “surveillance pricing,” also referred to as “dynamic pricing,” to offer different prices for the same products based on various consumer attributes. This can include factors such as location, demographics, credit history, and individual shopping behavior.
Many of the firms contacted by the FTC provide transaction, sales, and pricing services to major businesses both in the United States and internationally. Task Software manages transactions for several leading hospitality brands, including McDonald’s and Starbucks. Revionics offers retail price optimization tools and analytics to various global retailers, including Home Depot. Pros, which markets itself as a provider of AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clientele and partners with Microsoft in technology development.
The FTC aims to uncover issues within this “opaque market,” which sorts consumers and assigns targeted prices for products and services.
“Companies that collect personal data from Americans could risk individuals’ privacy. There is a concern that they might be leveraging this extensive personal information to inflate prices,” stated FTC Chair Lina Khan. “Americans have a right to know if businesses are utilizing detailed consumer data to implement surveillance pricing. The FTC’s investigation will illuminate this hidden network of pricing intermediaries.”
The FTC’s inquiry focuses on four main areas: the types of surveillance pricing services each company provides; the methods of data collection; details regarding customers and sales; and the impact of these surveillance practices on the prices consumers ultimately pay.