The Federal Trade Commission (FTC) has initiated an investigation into several major corporations regarding their practices of utilizing customer data, algorithms, and artificial intelligence to set individualized pricing.
Eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have been ordered by the FTC to provide information on the implications of these pricing strategies on privacy, competition, and consumer protection.
These companies employ techniques known as “surveillance pricing” or “dynamic pricing,” which allow them to offer varying prices for identical products based on factors like customer location, demographic details, credit history, and online behavior.
Many of the firms under scrutiny provide transaction, sales, and pricing services to some of the largest corporations in the U.S. and worldwide. Task Software is known for its transaction management services for hospitality giants like McDonald’s and Starbucks. Revionics specializes in retail price optimization and works with numerous global companies, including Home Depot. Pros, which markets itself as an AI-driven pricing solutions provider, serves well-known clients such as Nestlé, HP, and United Airlines, and also collaborates with Microsoft on technology development.
The FTC aims to uncover the mechanisms behind this complex market, which categorizes consumers and establishes targeted pricing.
“Companies that collect extensive personal data from Americans risk compromising individuals’ privacy. They might be leveraging this wealth of personal information to impose higher prices,” remarked FTC Chair Lina Khan. “Americans need transparency about whether businesses are using detailed consumer data to implement surveillance pricing. The FTC’s investigation will illuminate this obscure realm of pricing intermediaries.”
The agency is seeking information on four primary aspects: the types of surveillance pricing products and services offered by each company, data collection methods, sales and customer information, and the impact of these practices on the prices customers ultimately face.