The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their methods of utilizing customer data, algorithms, and artificial intelligence for personalized pricing strategies.
In a related development, McDonald’s is facing its first lawsuit stemming from an E. coli outbreak linked to its Quarter Pounder burgers.
The FTC has issued orders to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking detailed insights into how their pricing practices affect privacy, competition, and consumer protection.
These companies implement what is known as “surveillance pricing” or “dynamic pricing,” where different prices are shown to consumers for the same products based on various factors such as location, demographics, credit history, and shopping habits.
Many of the companies under scrutiny provide transaction, sales, and pricing services to major firms both in the U.S. and worldwide. Task Software manages transactions for prominent hospitality brands like McDonald’s and Starbucks, while Revionics offers retail price optimization tools and analytics for large chains, including Home Depot. Pros, a technology firm 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 implications of this “opaque market” that categorizes consumers and establishes targeted pricing strategies. 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 particularly focused on four areas: the types of surveillance pricing tools and services offered by each company, their data collection methods, customer and sales information, and the influence of these practices on the prices consumers pay.