The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to implement personalized pricing strategies.
On Tuesday, the FTC issued orders to eight firms—Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros—requesting information about how these pricing practices affect privacy, competition, and consumer protection.
These companies utilize data tools in a practice referred to as “surveillance pricing” or “dynamic pricing,” which allows them to display different prices for the same products based on individual consumer traits or behavior. Factors such as location, demographics, credit history, and online shopping habits can influence these tailored prices.
Many firms approached by the FTC play significant roles in providing transaction, sales, and pricing services to major businesses in the U.S. and internationally. Task Software manages transactions for well-known hospitality chains, including McDonald’s and Starbucks. Revionics offers retail price optimization software to major retailers like Home Depot, while Pros provides AI-driven pricing solutions for clients such as Nestlé, HP, and United Airlines. Pros is also a technological partner for Microsoft.
The FTC aims to uncover the complexities of this “opaque market,” which categorizes consumers and establishes targeted pricing for various 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,” said 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 is seeking details in four main areas: the types of surveillance pricing offerings from each company, their data collection methods, customer and sales data, and the influence of these surveillance practices on pricing outcomes for consumers.