The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence in personalized pricing strategies.
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The FTC has ordered eight companies—Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros—to provide information about the impact of their pricing practices on privacy, competition, and consumer protection.
These companies utilize data tools, including AI, in a practice known as “surveillance pricing” or “dynamic pricing,” which involves showing different prices to consumers based on various factors such as location, demographics, credit history, and shopping behavior.
Many of the targeted firms offer transaction, sales, and pricing services to some of the largest businesses in the U.S. and around the world. Task Software is involved in transaction management for major hospitality brands like McDonald’s and Starbucks, while Revionics supplies retail price optimization software to chains like Home Depot. Pros, which markets itself as an AI-driven pricing solution provider, serves clients such as Nestlé, HP, and United Airlines and collaborates with Microsoft on technology development.
The FTC aims to investigate the “opaque market” that categorizes consumers and sets targeted prices for goods and services. FTC Chair Lina Khan stated, “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. 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 in four critical areas: the types of surveillance pricing products and services offered by each company; data collection methods; customer and sales information; and how these surveillance practices affect the prices that consumers pay.