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.
On Tuesday, the regulatory agency issued orders to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking insight into how these practices affect privacy, competition, and consumer protection.
These companies utilize data tools to implement a strategy known as “surveillance pricing” or “dynamic pricing,” which allows them to display varying prices to consumers based on individual characteristics or behaviors such as location, demographics, credit history, and online shopping habits.
Many of the organizations engaged by the FTC are key providers of transaction, sales, and pricing services to both domestic and international industries. For example, Task Software manages transactions for major hospitality chains like McDonald’s and Starbucks. Revionics offers retail price optimization software and pricing analytics for numerous global retailers, including Home Depot. Pros, which markets itself as an AI-powered pricing solutions provider, serves clients like Nestlé, HP, and United Airlines and collaborates with Microsoft as a technology partner.
The FTC aims to explore this “opaque market” where shoppers are categorized and charged targeted prices for goods and services.
“Companies that collect personal data can jeopardize consumer privacy. Now, they might be taking advantage of this expansive reservoir of information to charge higher prices,” stated FTC Chair Lina Khan. “Americans deserve transparency regarding whether their data is used for surveillance pricing, and the FTC’s investigation will illuminate this hidden network of pricing intermediaries.”
The FTC is focusing on four main areas: the types of surveillance pricing products and services each firm provides; their data collection methods; customer and sales data; and the influence of these pricing practices on consumer costs.