The Federal Trade Commission (FTC) has initiated an investigation into several major corporations regarding their use of customer data, algorithms, and artificial intelligence to personalize pricing for consumers. Among the companies being scrutinized are Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, all of which received subpoenas from the FTC seeking insights into how these pricing strategies affect privacy, competition, and consumer protection.
Businesses utilize advanced data tools, including AI, to implement a strategy referred to as “surveillance pricing” or “dynamic pricing.” This method allows companies to present varying prices for the same items based on individual attributes such as location, demographics, credit history, and browsing or shopping history.
The contacted companies are significant players in transaction, sales, and pricing services for major corporations both in the U.S. and internationally. Task Software is notably tied to major hospitality brands like McDonald’s and Starbucks, while Revionics specializes in retail price optimization software for large chains, including Home Depot. Pros, which claims to provide AI-driven pricing solutions, serves clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft in technology development.
The FTC aims to clarify the complexities of a marketplace that categorizes consumers and sets tailored prices based on data collected. FTC Chair Lina Khan emphasized the risks posed to consumer privacy by companies that gather personal data, highlighting concerns that such information could lead to inflated prices for consumers. She stated, “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’s inquiry will focus on four main areas: the availability of surveillance pricing products and services, methods of data collection, customer and sales information, and the impact of surveillance practices on the pricing customers ultimately pay.