The Federal Trade Commission (FTC) is investigating several major companies regarding their practices related to customer data, algorithms, and artificial intelligence used in individualized pricing. The companies under scrutiny include Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, which were all issued information requests on Tuesday.
These businesses utilize advanced data tools for a pricing strategy often referred to as “surveillance pricing” or “dynamic pricing,” which allows them to present different prices for the same products based on individual customer characteristics. Factors such as location, demographics, credit history, and past browsing or shopping behavior are taken into account to adjust pricing.
The companies involved play significant roles in transaction, sales, and pricing services for numerous prominent businesses both in the U.S. and internationally. For example, Task Software works with major hospitality brands like McDonald’s and Starbucks, while Revionics provides price optimization software to global retailers, including Home Depot. Pros, which promotes itself as a provider of AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clients and collaborates with Microsoft as a technology development partner.
The FTC aims to clarify the complexities surrounding this opaque market that categorizes shoppers for targeted pricing. According to FTC Chair Lina Khan, the commission is concerned that companies exploiting personal data could jeopardize consumer privacy and may result in higher prices for customers. The inquiry intends to uncover the extent to which businesses are utilizing detailed consumer data in surveillance pricing strategies.
The FTC has outlined four specific areas of interest for the investigation: the types of surveillance pricing products each company offers, their data collection methods, the associated customer and sales information, and the effects of these practices on customer pricing.
This investigation highlights the ongoing efforts to strengthen consumer protection and shed light on how modern pricing strategies may impact privacy and cost equity for consumers. As consumers become more aware of their data’s value, they may advocate for greater transparency and fairness in pricing practices, leading to potential reforms that foster a more equitable marketplace.
In summary, the FTC’s investigation into surveillance pricing practices is a significant step toward ensuring transparency and consumer protection, reflecting a growing emphasis on ethical data use in today’s digital economy.