FTC Probes Major Firms Over Controversial Pricing Practices

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The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their usage of customer data, algorithms, and artificial intelligence in setting personalized pricing.

The investigation targets eight firms from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Company, Revionics, Bloomreach, and Pros. These companies have been ordered to provide information about how these pricing practices affect privacy, competition, and consumer protection.

Companies increasingly use data-driven tools, often referred to as “surveillance pricing” or “dynamic pricing,” to present different prices to consumers for identical products based on individual traits or behaviors. Factors influencing these prices may include a consumer’s location, demographics, credit history, and browsing or shopping habits.

Many of the firms being investigated play crucial roles in transaction, sales, and pricing services for major corporations in the United States and worldwide. For instance, Task Software manages transactions for notable companies like McDonald’s and Starbucks, while Revionics offers retail price optimization tools to large chains, including Home Depot. Pros, specializing in AI-driven pricing solutions, serves clients like Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.

The FTC aims to clarify the complexities of what it describes as an “opaque market” where consumers are categorized and charged targeted prices for goods and services.

FTC Chair Lina Khan emphasized the risks associated with companies collecting personal data, 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 seeking details in four primary areas: the types of surveillance pricing products and services offered by each company, the methods of data collection, customer and sales data, and how these surveillance practices affect the prices consumers ultimately pay.

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