The Federal Trade Commission (FTC) has initiated an investigation involving several major corporations regarding their practices in leveraging customer data, algorithms, and artificial intelligence for personalized pricing strategies.
The FTC has sent requests for information to eight companies spanning different sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency is examining how these companies’ pricing methods might affect privacy, market competition, and consumer protections.
These companies utilize data-driven tools, known as “surveillance pricing” or “dynamic pricing,” which allows them to display varying prices to different consumers based on a range of personal traits and behaviors. Factors influencing this pricing can include a consumer’s location, demographic profile, credit history, and previous shopping activity.
The implicated firms are significant players in the marketplace, providing transaction and pricing services for major U.S. and international brands. For example, Task Software handles transaction management for renowned hospitality chains like McDonald’s and Starbucks. Revionics offers retail pricing optimization software to large retailers, including Home Depot. Pros, which emphasizes AI-driven pricing solutions, boasts clients such as Nestlé, HP, and United Airlines and collaborates with Microsoft for technology development.
The FTC is seeking to clarify the “opaque market” that customizes pricing based on consumer categorization. FTC Chair Lina Khan stated that businesses that utilize personal data could jeopardize individuals’ privacy. She indicated that the inquiry is aimed at revealing whether companies exploit detailed consumer profiles for higher pricing strategies, thereby illuminating the underreported dynamics of pricing intermediaries.
The FTC is particularly interested in four main areas: the specific types of surveillance pricing products and services offered by each company; the methods they use to gather data; the customer and sales information they collect; and the impact of these practices on the final prices consumers pay.