The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their practices involving customer data, algorithms, and artificial intelligence in relation to personalized pricing strategies.
The inquiry specifically targets eight companies: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. These firms received requests from the FTC seeking details about how their pricing practices affect privacy, competition, and consumer protection.
The practice at the center of the investigation, commonly referred to as “surveillance pricing” or “dynamic pricing,” involves using data tools such as AI to display varying prices to consumers for identical products based on their specific characteristics or behaviors, including location, demographics, credit history, and shopping history.
Many of the firms involved in the investigation are known for providing transaction, sales, and pricing services to large businesses both in the U.S. and internationally. Task Software, for instance, manages transactions for major hospitality companies like McDonald’s and Starbucks. Revionics specializes in retail pricing optimization and analytics for notable chains such as Home Depot. Pros, which promotes its AI-powered pricing solutions, serves clients such as Nestlé, HP, and United Airlines and collaborates with Microsoft on technology development.
The FTC aims to clarify the complexities of this “opaque market,” which involves classifying shoppers and implementing targeted pricing strategies for products and services. 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 agency is focusing its inquiry on four primary areas: the types of surveillance pricing products and services offered by each company, data collection methods, customer and sales information, and the influence of these practices on the final prices that customers pay.