The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their practices in using customer data, algorithms, and artificial intelligence to set personalized pricing.
The FTC has issued orders to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking insights into how these pricing strategies affect privacy, competition, and consumer protection.
These companies utilize data tools, such as AI, to implement a practice known as “surveillance pricing” or “dynamic pricing,” which allows them to display different prices for the same products based on various consumer characteristics or behaviors, such as location, demographics, credit history, and online shopping habits.
Many of the firms contacted by the FTC provide essential transaction, sales, and pricing services to some of the largest businesses both in the U.S. and internationally. Task Software, for example, manages transactions for major hospitality chains, including McDonald’s and Starbucks, while Revionics offers retail price optimization tools to global retailers like Home Depot. Pros, which markets itself as an AI-driven pricing solutions provider, serves notable clients including Nestlé, HP, and United Airlines, and is a technology partner with Microsoft.
The FTC aims to investigate this “opaque market” that categorizes consumers and assigns targeted prices for various products and services. FTC Chair Lina Khan emphasized the importance of transparency, stating, “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 specifically seeking information on four critical aspects: the types of surveillance pricing products and services offered by each company, methods of data collection, customer and sales data, and the influence of these practices on the prices consumers ultimately pay.