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.
Eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received requests for information from the FTC on Tuesday. The agency aims to understand how these pricing methods affect privacy, competition, and consumer protection.
These companies utilize data-driven tools, including AI, to implement a method known as “surveillance pricing” or “dynamic pricing,” which displays different prices to consumers for the same products based on variables such as location, demographics, credit history, and online behavior.
Many of the contacted firms are involved in providing transaction, sales, and pricing services to some of the largest businesses in the United States and worldwide. Task Software manages transactions for major hospitality chains such as McDonald’s and Starbucks, while Revionics delivers retail pricing optimization software to global retailers like Home Depot. Pros specializes in AI-powered pricing solutions and counts Nestlé, HP, and United Airlines as clients, in addition to being a technology partner of Microsoft.
The FTC’s goal is to dissect this “opaque market” that classifies shoppers and establishes targeted pricing for products and services.
“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,” stated FTC Chair Lina Khan. “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 FTC’s investigation will focus on four main areas: the types of surveillance pricing products and services offered by each company; their data collection methods; sales and customer information; and how these practices affect the prices consumers ultimately pay.