The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
On Tuesday, the FTC issued orders to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, requesting detailed information about the implications of these pricing techniques on privacy, competition, and consumer protection.
These companies utilize data-driven tools, referred to as “surveillance pricing” or “dynamic pricing,” which allow them to display varying prices for identical products based on individual consumers’ attributes and behaviors, such as location, demographic information, credit history, and online shopping habits.
Several of the contacted companies offer transaction, sales, and pricing services to major firms both within the U.S. and internationally. For instance, Task Software manages transactions for well-known hospitality entities like McDonald’s and Starbucks, while Revionics delivers retail price optimization software to global retailers, including Home Depot. Pros specializes in AI-powered pricing solutions and has clients such as Nestlé, HP, and United Airlines, in addition to a partnership with Microsoft for technology development.
The FTC aims to investigate what it describes as an “opaque market” that segments consumers to establish targeted pricing for goods and services.
FTC Chair Lina Khan stated, “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 commission is particularly focused on four areas: the types of surveillance pricing products offered, data collection methods, customer and sales information, and the effects of these practices on the prices customers ultimately pay.