The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their methods of utilizing customer data, algorithms, and artificial intelligence to customize pricing strategies.
The inquiry involves eight firms from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. These companies received requests for information from the FTC on Tuesday, focusing on how these pricing practices may affect privacy, competition, and consumer protection.
Companies are using data-driven techniques, known as “surveillance pricing” or “dynamic pricing,” which enable them to present different prices for identical products based on consumers’ specific characteristics or behaviors. Factors taken into account might include location, demographics, credit history, and online browsing or shopping activity.
Many of the firms being scrutinized by the FTC provide vital transaction, sales, and pricing services to some of the largest corporations in the United States and globally. For instance, Task Software manages transaction processes for major hospitality brands like McDonald’s and Starbucks. Similarly, Revionics specializes in retail price optimization software used by various global retailers, including Home Depot. Pros, which offers AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clientele and collaborates with Microsoft on technology development.
The FTC aims to uncover details about this “opaque market,” where businesses categorize consumers and set targeted prices for goods and services.
“Firms that collect Americans’ personal data can jeopardize individual privacy. There is a concern that these companies might exploit extensive personal information to impose higher prices,” stated FTC Chair Lina Khan. “Consumers have the right to know if their detailed data is being used for surveillance pricing, and the FTC’s investigation will bring transparency to this hidden network of pricing intermediaries.”
The FTC is seeking information in four primary areas: the types of surveillance pricing products and services offered by each company; data collection methods; customer and sales data; and the influence of these surveillance practices on the prices consumers ultimately pay.