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 personalize pricing for individual consumers.
On Tuesday, the FTC issued information requests to eight companies spanning various industries, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency seeks to understand how these practices impact privacy, competition, and consumer protection.
These companies utilize data tools in a practice known as “surveillance pricing,” or “dynamic pricing,” which allows them to offer different prices to consumers for the same products based on individual characteristics and behaviors. This can include factors such as location, demographics, credit history, and online activity.
Many of the firms targeted by the FTC offer transaction, sales, and pricing services to some of the largest businesses both in the United States and internationally. For instance, Task Software manages transactions for significant hospitality brands, including McDonald’s and Starbucks. Revionics specializes in retail price optimization and pricing analytics for major chains like Home Depot. Pros, which promotes itself as a provider of AI-driven pricing solutions, serves clients such as Nestlé, HP, and United Airlines, and partners with Microsoft for technology development.
The FTC aims to clarify the complexities of this “opaque market” where shoppers are categorized, leading to targeted pricing strategies for various products and services.
“Companies that collect personal data from Americans risk compromising individuals’ privacy. They could be taking advantage of this extensive personal information to impose higher prices,” stated FTC Chair Lina Khan. “Consumers should be informed about whether businesses are utilizing detailed consumer data for surveillance pricing, and the FTC’s investigation will illuminate this concealed ecosystem of pricing intermediaries.”
The FTC’s inquiry will focus on four crucial areas: the types of surveillance pricing products and services offered by the companies, their data collection methods, customer and sales information, and the influence of these practices on the final prices paid by consumers.