The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence in implementing individualized pricing strategies. Eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received requests for information from the agency, focusing on the implications of these pricing methods on privacy, competition, and consumer protection.
These companies employ what is known as “surveillance pricing,” or “dynamic pricing,” utilizing data tools to show variable prices for the same products based on consumer characteristics and behaviors. Factors influencing these price variations may include location, demographics, credit history, and online shopping activities.
Many of the affected companies provide transaction, sales, and pricing services to some of the largest firms in the U.S. and around the world. Task Software manages transactions for major hospitality brands such as McDonald’s and Starbucks, while Revionics offers retail price optimization solutions to various global chains, including Home Depot. Pros, branded as an AI-driven pricing solution provider, has a client list featuring Nestlé, HP, and United Airlines, and partners with Microsoft in technology development.
The FTC aims to uncover practices within this “opaque market” that allows for the categorization of consumers and the establishment of targeted pricing schemes. 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 commission is requesting information on four primary aspects: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales information, and how these practices affect the prices paid by consumers.