The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their practices involving customer data, algorithms, and artificial intelligence used for personalized pricing.
On Tuesday, the FTC issued information requests to eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The regulators aim to understand the implications of these pricing strategies on privacy, competition, and consumer protection.
These companies utilize data tools, such as artificial intelligence, to implement a practice referred to as “surveillance pricing” or “dynamic pricing,” where different prices are presented to consumers for identical products based on various factors like location, demographics, credit history, and online behavior.
Many of the firms involved provide transaction, sales, and pricing services to some of the largest companies both in the U.S. and worldwide. For instance, Task serves as the transaction management provider for several major hospitality brands, including McDonald’s and Starbucks. Revionics offers retail price optimization software to global retailers such as Home Depot. Pros, known for its AI-driven pricing solutions, has clients like Nestlé, HP, and United Airlines, and collaborates with Microsoft for technology development.
The FTC is seeking to unveil the complexities of this “opaque market” that categorizes shoppers and adjusts prices accordingly. “Companies that exploit Americans’ personal data put consumer privacy at risk. There’s concern that this vast collection of personal information could be used to impose higher prices,” stated FTC Chair Lina Khan. “Americans have the right to know if businesses are using detailed consumer data for surveillance pricing, and this inquiry aims to illuminate this shadowy pricing ecosystem.”
The FTC’s investigation focuses on four main areas: the types of surveillance pricing products and services offered, the methods of data collection, customer and sales data, and the impact of these practices on the pricing experienced by customers.