The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their utilization of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
Eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received requests from the FTC seeking information about the implications of these pricing practices on privacy, competition, and consumer protection.
These firms are employing techniques known as “surveillance pricing,” also referred to as “dynamic pricing,” which allows them to display varying prices for identical products based on consumer traits such as location, demographics, credit history, and previous shopping behavior.
Many of the firms under investigation offer transaction, sales, and pricing services to major corporate players both in the U.S. and globally. Task Software is noted for its transaction management services utilized by several leading hospitality brands, including McDonald’s and Starbucks. Revionics specializes in retail price optimization software and analytics for retailers like Home Depot. Pros, which promotes itself as a provider of AI-driven pricing solutions, serves notable clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft as a technology development partner.
The FTC aims to clarify the complexities surrounding this “opaque market” that categorizes consumers and applies targeted pricing.
“Companies that collect personal data from Americans can jeopardize individual privacy. It appears these companies may be capitalizing on extensive personal information to charge higher prices,” stated FTC Chair Lina Khan. “Americans should be informed about whether their detailed consumer data is being used for surveillance pricing, and this inquiry will illuminate the obscure environment of price-setting intermediaries.”
The FTC is seeking details in four main areas: the surveillance pricing products and services offered by each company, methods of data collection, customer and sales data, and the influence these surveillance tactics have on the prices consumers pay.