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.
Eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received information requests from the agency on Tuesday. The FTC aims to examine how these pricing practices impact privacy, competition, and consumer protection.
These companies utilize data tools in a method known as “surveillance pricing,” or “dynamic pricing,” which allows them to present varying prices for identical products based on individual consumer traits or behaviors. Factors influencing pricing may include a customer’s location, demographics, credit history, and browsing or shopping habits.
Many of the firms approached by the FTC provide essential transaction, sales, and pricing services to major corporations in the U.S. and around the world. For example, Task Software manages transactions for well-known hospitality brands like McDonald’s and Starbucks, while Revionics offers pricing analytics and retail price optimization software to global retailers, including Home Depot. Pros, which specializes in AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clientele and collaborates with Microsoft on technology development.
The FTC is seeking to clarify the workings of this “opaque market” that engages in categorizing consumers and setting targeted prices 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,” stated FTC Chair Lina Khan. “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 focusing its inquiry on four main areas: the types of surveillance pricing products and services each company provides, data collection methods, customer and sales information, and the ways in which these pricing practices affect the prices consumers pay.