The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to set personalized pricing.
The companies under scrutiny include Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC has issued orders for these firms to provide information related to how their pricing practices affect privacy, competition, and consumer protection.
These companies utilize data tools, commonly referred to as “surveillance pricing” or “dynamic pricing,” to offer varying prices for the same products based on factors such as customer location, demographics, credit history, and shopping behavior.
Many of the targeted companies are integral to the operations of major businesses in the U.S. and around the world. For instance, Task Software is known for its transaction management services for major hospitality brands like McDonald’s and Starbucks, while Revionics offers pricing optimization software for retailers, including Home Depot. Pros is notable for providing AI-driven pricing solutions to clients such as Nestlé, HP, and United Airlines, and is also a technology partner of Microsoft.
The FTC aims to investigate what it terms an “opaque market” where consumer data is used to categorize shoppers and set tailored prices for goods and services.
FTC Chair Lina Khan expressed concerns, 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 FTC’s inquiry will focus on four main areas: the types of surveillance pricing products and services offered by each company, data collection practices, customer and sales information, and the impact of these surveillance methods on pricing for consumers.