The Federal Trade Commission (FTC) has initiated an investigation into several major corporations regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
On Tuesday, the FTC issued orders to eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking insights into how these pricing methodologies affect privacy, competition, and consumer protection.
These companies utilize data tools, such as AI, to implement a tactic known as “surveillance pricing” or “dynamic pricing,” which allows them to present varying prices for the same products based on individual consumer characteristics or behaviors. Factors influencing these price variations can include geographic location, demographics, credit histories, and online shopping behavior.
Many of the firms approached by the FTC are key players in providing transaction, sales, and pricing services to prominent businesses both in the United States and internationally. Task Software is known for its transaction management services for major hospitality brands like McDonald’s and Starbucks, while Revionics offers retail price optimization tools and analytics to well-known chains like Home Depot. Pros, a company specializing in AI-driven pricing solutions, counts renowned names such as Nestlé, HP, and United Airlines among its clientele, and is also a technology partner for Microsoft.
The FTC aims to uncover the complexities of this “opaque market” where consumers are categorized and charged different prices for the same products or 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 commission is seeking information in four main areas: the types of surveillance pricing products and services each company offers, their data collection methods, customer and sales data, and the impact of these practices on the prices paid by customers.