The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
On Tuesday, the FTC issued orders to eight firms spanning various industries, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency is seeking information on how these pricing practices may affect privacy, competition, and consumer protection.
Companies utilize advanced data tools, such as artificial intelligence, to implement a practice referred to as “surveillance pricing,” commonly known as “dynamic pricing.” This practice tailors prices for the same products according to individual consumer characteristics and behaviors, which can include factors like location, demographics, credit history, and online shopping habits.
Many of the firms contacted by the FTC offer transaction, sales, and pricing services to some of the largest businesses in the U.S. and worldwide. Task Software, for instance, manages transactions for major hospitality brands like McDonald’s and Starbucks. Revionics delivers retail pricing optimization software and analytics to global retail chains, including Home Depot. Pros, a provider of AI-enhanced pricing solutions, serves notable clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft for technology development.
The FTC aims to uncover the intricacies of this “opaque market” that categorizes consumers and determines targeted pricing for goods and services.
“In a landscape where companies collect extensive personal data, there is a risk to consumer privacy. These firms might be leveraging this personal information to impose higher charges,” stated FTC Chair Lina Khan. “Americans have the right to understand if and how businesses are using personal data to engage in surveillance pricing, and our inquiry aims to clarify this complex environment of pricing intermediaries.”
The FTC is specifically looking for insights into four key aspects: the types of surveillance pricing services offered by each company, their data collection methods, relevant customer and sales information, and the ways these practices affect consumer pricing.