The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their practices related to customer data, algorithms, and artificial intelligence in personalized pricing strategies.
The investigation affects eight firms from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC has issued orders to these companies, seeking insights into how their pricing methods may impact privacy, competition, and consumer protection.
Many of the targeted companies utilize data analysis tools, including AI, for a practice referred to as “surveillance pricing” or “dynamic pricing.” This technique allows companies to display different prices for the same products to various consumers based on factors like location, demographics, credit history, and online shopping behaviors.
Some of these firms are significant players in transaction, sales, and pricing services. Task Software, for example, manages transactions for major hospitality brands, including McDonald’s and Starbucks. Revionics offers retail price optimization tools to global retailers like Home Depot, while Pros provides AI-driven pricing solutions to clients such as Nestlé, HP, and United Airlines, and maintains a technology partnership with Microsoft.
The FTC aims to clarify the complexities surrounding this “opaque market” that profiles consumers and sets targeted prices for goods 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 agency is particularly interested in four critical areas: the various surveillance pricing products and services offered by each company, their data collection methods, customer and sales data, and how these practices affect customer pricing.