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.
Eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have received information requests from the FTC. The regulatory body is examining how these practices affect privacy, competition, and consumer rights.
Companies are utilizing tools like AI to engage in a practice referred to as “surveillance pricing” or “dynamic pricing,” where different prices are displayed to consumers for identical products based on various factors such as location, demographics, credit history, and online shopping behavior.
Many of the contacted companies provide pricing and transaction services to significant businesses in the U.S. and abroad. Task Software manages transactions for several well-known hospitality brands, including McDonald’s and Starbucks. Revionics specializes in retail price optimization software for global retailers like Home Depot. Pros, an AI-driven pricing solutions provider, serves clients such as Nestlé, HP, and United Airlines, and is also a technology partner of Microsoft.
The FTC aims to uncover the workings of this “opaque market,” where consumer targeting is used to set specific prices 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 FTC is particularly interested in four areas: the types of surveillance pricing products and services offered, methods of data collection, customer and sales information, and the effects of these practices on the pricing consumers pay.