The Federal Trade Commission (FTC) has initiated an investigation into several major corporations regarding their practices related to customer data usage, algorithms, and artificial intelligence for personalized pricing.
On Tuesday, the FTC issued orders to eight firms: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency seeks insights into how these pricing strategies may affect consumer privacy, competition, and overall consumer protection.
Many companies utilize data-driven tools, including AI, in a technique known as “surveillance pricing” or “dynamic pricing,” which allows them to present varying prices for the same products based on specific consumer attributes or behaviors. Factors considered can include a shopper’s location, demographics, credit history, and online activity.
The firms contacted by the FTC play significant roles in transaction, sales, and pricing services for major businesses in the U.S. and around the globe. For instance, Task Software manages transactions for notable hospitality brands such as McDonald’s and Starbucks, while Revionics offers pricing analytics to retail giants like Home Depot. Pros provides AI-driven pricing solutions and counts Nestlé, HP, and United Airlines among its clientele, and collaborates with Microsoft for technology development.
The FTC aims to investigate this “opaque market” in which consumers are categorized and targeted with specific prices for products and services. FTC Chair Lina Khan emphasized the potential risks to consumer privacy, stating that the personal data collected could lead to higher prices. She expressed the necessity for transparency in whether companies are exploiting detailed consumer information for surveillance pricing.
The FTC is seeking information on four primary aspects: the types of surveillance pricing products and services offered by each firm, their methods of data collection, customer and sales data, and how these surveillance practices impact the final prices that consumers pay.