The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to customize pricing strategies.
On Tuesday, the FTC issued information requests to eight firms: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency aims to understand the effects of this pricing method on privacy, competition, and consumer protection.
Many of these companies utilize data-driven techniques known as “surveillance pricing,” or dynamic pricing, which allows businesses to present varying prices for the same product based on individual customer characteristics such as location, demographics, credit history, and online behaviors.
The companies contacted by the FTC are significant players in transaction, sales, and pricing services, serving some of the largest firms both in the United States and worldwide. Task, for instance, manages transactions for major hospitality brands, including McDonald’s and Starbucks. Revionics offers pricing optimization and analytics to global retailers, including Home Depot. Pros, a provider of AI solutions for pricing, works with notable clients like Nestlé, HP, and United Airlines and collaborates with Microsoft on technology development.
The FTC seeks to clarify the complexities within this “opaque market,” which determines targeted pricing based on shopper classifications.
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’s investigation will focus on four main areas: the types of surveillance pricing offerings from each company, data collection methods, customer and sales information, and the impact of these practices on consumer pricing.