The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their practices surrounding customer data, algorithms, and artificial intelligence in relation to personalized pricing.
Eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have been ordered to provide information by the FTC. The agency is examining the implications of personalized pricing strategies on consumer privacy, competition, and protection.
Companies use data-driven methods, often referred to as “surveillance pricing” or “dynamic pricing,” to display different prices for the same products, influenced by factors like location, demographics, credit history, and browsing behavior.
Many of those being investigated offer transaction and pricing services to major U.S. and international companies. Task Software is known for managing transactions for notable hospitality brands such as McDonald’s and Starbucks, while Revionics supplies pricing optimization tools to large retailers including Home Depot. Pros, which offers AI-based pricing solutions, counts major companies like Nestlé, HP, and United Airlines among its clients, and also collaborates with Microsoft.
The FTC aims to clarify the complexities surrounding this market that profiles consumers to set tailored prices.
“Companies that leverage Americans’ personal data can endanger individuals’ privacy. Many may be taking advantage of a vast amount of personal information to impose higher prices,” stated FTC Chair Lina Khan. “Americans need transparency regarding whether businesses are using detailed consumer data for surveillance pricing, and our inquiry will illuminate this obscure pricing practice.”
The FTC is particularly interested in four areas: the types of surveillance pricing solutions offered, the methods of data collection, customer and sales data, and the impact of these practices on the final prices consumers pay.