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 requests for information to eight firms: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency is seeking insights into how these pricing practices affect privacy, competition, and consumer protection.
These companies utilize data-driven methods, often referred to as “surveillance pricing” or “dynamic pricing,” which allows them to present varying prices for identical products based on individual consumer traits and behaviors. Factors influencing these prices can include geographic location, demographics, credit histories, and online shopping behaviors.
Among the targeted companies, Task Software manages transactions for large hospitality brands like McDonald’s and Starbucks, while Revionics offers pricing optimization tools to major retailers including Home Depot. Pros, a company specializing in AI-based pricing solutions, counts major corporations like Nestlé, HP, and United Airlines as clients, and collaborates with Microsoft on technology development.
The FTC aims to investigate the complexities of this “opaque market,” which utilizes consumer categorization to set targeted pricing for goods and services.
FTC Chair Lina Khan highlighted concerns about privacy, stating, “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.” She emphasized the need for transparency regarding how detailed consumer data is used for surveillance pricing, stating that the FTC’s inquiry will illuminate this obscure market involving pricing intermediaries.
The agency is particularly interested in four main areas: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales data, and the impact of these practices on the prices consumers pay.