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.
On Tuesday, the FTC issued orders to eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking information on how this pricing methodology affects privacy, competition, and consumer protection.
These firms utilize data tools, including artificial intelligence, to implement a practice referred to as “surveillance pricing” or “dynamic pricing,” which allows them to present different prices to consumers based on various factors such as location, demographics, credit history, and online activity.
The companies involved provide critical transaction, sales, and pricing services to both leading U.S. businesses and international brands. For instance, Task Software is behind the transaction management for several significant hospitality brands, including McDonald’s and Starbucks. Revionics offers retail price optimization software to global retailers like Home Depot, while Pros provides AI-driven pricing solutions to clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC aims to clarify the “opaque market” where shopper data is used to set targeted prices for products and services. FTC Chair Lina Khan remarked, “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 agency is seeking information in four main areas: the types of surveillance pricing products offered by each company, methods of data collection, relevant customer and sales data, and how these surveillance practices impact the prices consumers ultimately pay.