The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to personalize pricing strategies.
Eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, were served with information requests on Tuesday. The FTC aims to understand the implications of such pricing practices on consumer privacy, competition, and consumer protection.
The practice under scrutiny, often referred to as “surveillance pricing” or “dynamic pricing,” involves companies using data tools to present different prices for the same products to various consumers based on attributes like location, demographics, credit history, and browsing or shopping behaviors.
Many of the firms involved in the investigation provide transaction, sales, and pricing services to some of the largest corporations both in the U.S. and worldwide. Task Software manages transactions for major hospitality chains such as McDonald’s and Starbucks. Revionics supplies retail price optimization software to global retailers, including Home Depot. Pros, an AI-powered pricing solutions provider, serves clients like Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC’s goal is to uncover the intricacies of this “opaque market,” which categorizes consumers and sets targeted prices. FTC Chair Lina Khan emphasized the potential risks to privacy, 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.” The inquiry aims to clarify whether businesses are employing detailed consumer data for surveillance pricing practices.
The FTC is specifically seeking information in four areas: the types of surveillance pricing products and services provided by each company, data collection methods, details on customer and sales data, and the influence of these surveillance practices on the prices customers ultimately pay.