The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their practices surrounding customer data, algorithms, and artificial intelligence used for personalized pricing strategies.
The investigation involves eight companies from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC issued orders to these firms on Tuesday, seeking details on how personalized pricing affects privacy, competition, and consumer protection.
Companies utilize data tools, particularly AI, for what is termed “surveillance pricing” or “dynamic pricing,” where different prices are offered to consumers for identical products based on certain characteristics or behaviors. These factors may include location, demographics, credit history, as well as browsing and shopping history.
Many of the organizations under FTC scrutiny provide transaction, sales, and pricing services to prominent businesses both in the U.S. and internationally. Task Software is known for managing transactions for major hospitality brands like McDonald’s and Starbucks. Revionics offers retail price optimization software and analytics to large chains such as Home Depot. Pros, a firm that markets itself as an AI-powered pricing solutions provider, counts Nestlé, HP, and United Airlines among its clients and collaborates with Microsoft for technology development.
The FTC aims to uncover issues within this “opaque market” that profiles consumers and sets specific prices for goods and services. FTC Chair Lina Khan stated, “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 agency is particularly interested in four main aspects: the types of surveillance pricing products and services offered by each company; methods of data collection; customer and sales information; and the impact of these surveillance practices on the prices customers ultimately pay.