The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their practices of utilizing customer data, algorithms, and artificial intelligence to customize pricing.
Eight companies across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received formal requests for information from the FTC on Tuesday. The agency is examining how these pricing strategies affect privacy, competition, and consumer protection.
Companies often utilize tools like artificial intelligence for a practice referred to as “surveillance pricing” or “dynamic pricing,” which allows them to present varying prices for the same products to different consumers based on their individual characteristics or behaviors. Factors that might influence this include location, demographics, credit history, as well as browsing and shopping habits.
Many of the firms under investigation provide transaction and pricing services to leading organizations in the U.S. and worldwide. Task Software, for instance, manages transactions for major hospitality brands, including McDonald’s and Starbucks. Revionics offers retail pricing optimization software to numerous global retailers, including Home Depot, while Pros, which specializes in AI-driven pricing solutions, counts major companies like Nestlé, HP, and United Airlines as clients. Pros is also a technology partner for Microsoft.
The FTC aims to investigate what it describes as an “opaque market” that profiles consumers and establishes targeted pricing for products and services.
“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,” FTC Chair Lina Khan stated. “Americans deserve to know whether businesses are using detailed consumer data to deploy surveillance pricing, and the FTC’s inquiry will shed light on this shadowy ecosystem of pricing middlemen.”
The FTC is seeking information on four main aspects: the types of surveillance pricing products and services offered by each company; methods of data collection; customer and sales data; and the effects of these surveillance practices on the prices consumers ultimately pay.