The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
The investigation targets eight firms spanning various industries: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. On Tuesday, these companies received orders from the FTC seeking information on how their pricing practices affect privacy, competition, and consumer protection.
These companies utilize data tools, including AI, to implement a practice known as “surveillance pricing” or “dynamic pricing.” This approach allows them to display different prices for the same products to different consumers, depending on various factors such as location, demographics, credit history, and online shopping behavior.
Many of the companies involved provide transaction, sales, and pricing services to some of the largest firms both in the U.S. and globally. Task Software, for example, manages transactions for major hospitality businesses like McDonald’s and Starbucks. Revionics offers retail price optimization software to several prominent retailers, including Home Depot. Pros, which specializes in AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clients and collaborates with Microsoft as a technology development partner.
The FTC aims to investigate the unclear market that employs categorized shopper data to establish targeted pricing for goods and services.
According to FTC Chair Lina Khan, “Firms that harvest Americans’ personal data can put people’s privacy at risk. Now firms could be exploiting this vast trove of personal information to charge people higher prices. 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 agency is focusing on four main aspects in its investigation: the types of surveillance pricing services offered by each company, their data collection methods, customer and sales information, and how these surveillance practices affect the pricing that customers pay.