The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their methods of utilizing customer data, algorithms, and artificial intelligence to customize pricing for individual consumers.
On Tuesday, the FTC issued orders for information to eight companies across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency is particularly interested in understanding how these pricing strategies affect privacy, competition, and consumer protection.
Many businesses employ a strategy called “surveillance pricing,” also known as “dynamic pricing,” which involves displaying different prices for the same products based on individual consumer characteristics and behaviors. Factors influencing pricing can include a customer’s location, demographics, credit history, and shopping habits.
The companies under investigation largely offer transaction, sales, and pricing services to some of the largest corporations both domestically and internationally. For instance, Task Software manages transactions for major hospitality brands like McDonald’s and Starbucks, while Revionics provides pricing software and analytics to global retailers, including Home Depot. Pros, a firm specializing in AI-driven pricing solutions, serves clients like Nestlé, HP, and United Airlines, and collaborates with Microsoft as a technology development partner.
The FTC aims to uncover details about this “opaque market,” which categorizes consumers and employs targeted pricing tactics.
FTC Chair Lina Khan emphasized the importance of transparency, 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’s inquiry focuses on 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 influence of these practices on final consumer prices.