The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their practices involving customer data, algorithms, and artificial intelligence used to set personalized pricing.
The investigation involves eight companies from various sectors: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC requested information from these firms to understand the implications of their pricing strategies on privacy, competition, and consumer protection.
These companies utilize tools such as artificial intelligence to implement a practice referred to as “surveillance pricing” or “dynamic pricing,” which allows them to present varying prices for the same products based on factors like consumer location, demographics, credit history, and online behavior.
Among those investigated, Task Software manages transactions for major hospitality brands, including McDonald’s and Starbucks. Revionics offers retail price optimization and pricing analytics to various global retailers, including Home Depot. Pros, which prides itself on AI-driven pricing solutions, serves clients like Nestlé, HP, and United Airlines and collaborates with Microsoft.
The FTC is aiming to clarify a “opaque market” that identifies customers and sets 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 focuses on four main areas: the types of surveillance pricing products and services offered, data collection methods, customer and sales information, and the impact of these practices on consumer pricing.