The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
In a notable move, the regulatory body has issued information demands to eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking insights into the implications of these pricing methods on privacy, competition, and consumer rights.
Many firms utilize advanced data tools, such as artificial intelligence, to implement a strategy referred to as “surveillance pricing” or “dynamic pricing.” This practice allows companies to present varied prices for identical products to different consumers, depending on factors such as location, demographics, credit history, and online shopping behaviors.
The companies under scrutiny often provide transaction, sales, and pricing services to major corporations in the U.S. and worldwide. Task Software is the transaction management firm for numerous hospitality chains, including McDonald’s and Starbucks. Revionics specializes in retail price optimization software and analytics, serving global retailers like Home Depot. Pros markets itself as an AI-driven pricing solution provider, with clients such as Nestlé, HP, and United Airlines, and is also a technology partner of Microsoft.
The FTC aims to investigate this “opaque market” where shoppers are classified and targeted with specific pricing for services and products.
“Companies that gather personal information from Americans risk compromising privacy. It appears they may be taking advantage of extensive personal data to impose higher prices,” stated FTC Chair Lina Khan. “Consumers deserve transparency about whether businesses are utilizing detailed data to institute surveillance pricing, and this inquiry aims to illuminate the obscure world of pricing intermediaries.”
The FTC is focusing on four primary areas of investigation: the types of surveillance pricing products and services offered, data collection methods, customer and sales information, and the impact of these practices on the pricing customers ultimately face.