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.
Eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have been directed by the FTC to provide information about the effects of their pricing practices on privacy, competition, and consumer protection.
These firms utilize advanced data tools, such as artificial intelligence, to engage in “surveillance pricing,” also referred to as “dynamic pricing.” This technique enables them to present different prices for identical products to various consumers, based on factors like their location, demographics, credit histories, and online behaviors.
Many of the organizations targeted by the FTC offer transaction, sales, and pricing services to some of the largest corporations both in the U.S. and internationally. Task Software is known for managing transactions for major hospitality brands, including McDonald’s and Starbucks. Revionics specializes in retail price optimization and analytics for global chains like Home Depot. Pros, an AI-driven software provider, serves clients such as Nestlé, HP, and United Airlines, and is also a technology partner for Microsoft.
The FTC aims to address the complexities of this “opaque market,” which classifies shoppers and assigns targeted prices for various goods and services.
“Businesses that collect personal data from Americans pose a potential risk to privacy. It’s possible that they are utilizing this extensive amount of personal information to impose higher prices,” said FTC Chair Lina Khan. “Americans have the right to know if companies are using comprehensive consumer data to practice surveillance pricing, and our investigation will illuminate this obscure network of pricing intermediaries.”
The FTC has specified that it seeks information in four main areas: the types of surveillance pricing products and services provided by each company, the methods of data collection, customer and sales data, and the impact of these surveillance practices on the prices charged to consumers.