The Federal Trade Commission (FTC) has initiated an investigation into a select group of major companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing.
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The FTC has issued requests for information to eight companies spanning various sectors: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency aims to understand how these practices affect privacy, competition, and consumer protection.
Companies are utilizing data tools, including AI, in a practice known as “surveillance pricing,” also referred to as “dynamic pricing,” which allows them to present varying prices for the same products based on individual consumer attributes and behaviors. Factors influencing these prices may include geographic location, demographic details, credit history, and online shopping behaviors.
Many of the firms contacted by the FTC provide sales, transaction, and pricing services to some of the largest corporations in the United States and around the globe. For instance, Task Software is the transaction management provider for prominent hospitality brands like McDonald’s and Starbucks. Revionics offers retail price optimization software and analytics for global retailers, including Home Depot. Pros, which specializes in AI-driven pricing solutions, serves clients such as Nestlé, HP, and United Airlines, and is also affiliated with Microsoft as a technology development partner.
The FTC is focused on uncovering details about the “opaque market” that categorizes consumers to determine targeted pricing for goods and services.
“Companies that collect personal data from Americans may pose a privacy risk. They could also be taking advantage of this wealth of information to charge higher prices,” stated FTC Chair Lina Khan. “Americans need to understand if businesses are utilizing detailed consumer data to implement surveillance pricing, and the FTC’s inquiry aims to clarify this unclear network of pricing intermediaries.”
The FTC has specifically requested information regarding the types of surveillance pricing products and services each company offers, their data collection methods, customer and sales information, and how these surveillance practices affect the prices that consumers ultimately pay.