The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence to personalize pricing for consumers.
Among the eight companies being scrutinized are Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC issued orders to these firms, requesting information about the effects of their pricing strategies on privacy, competition, and consumer protection.
These companies are known to utilize data-driven practices, including “surveillance pricing” or “dynamic pricing,” which allows them to present different prices for the same products based on various consumer factors such as location, demographics, credit history, and online behavior.
Many firms involved in the investigation provide transactional and pricing services to leading businesses in the U.S. and worldwide. For instance, Task Software handles transaction management for numerous hospitality giants like McDonald’s and Starbucks. Revionics specializes in retail price optimization software for brands including Home Depot, while Pros, a company that specializes in AI-driven pricing solutions, counts Nestlé, HP, and United Airlines as clients. Additionally, Pros collaborates with Microsoft in technology development.
The FTC aims to clarify the workings of this “opaque market” that categorizes consumers and establishes targeted pricing for products and services. “Companies that collect Americans’ personal data may jeopardize their privacy. They could exploit this extensive personal information to set higher prices,” stated FTC Chair Lina Khan. “Consumers deserve transparency regarding whether businesses use detailed consumer data to implement surveillance pricing, and this inquiry will provide insights into this obscure network of pricing intermediaries.”
The agency is specifically seeking information in four primary areas: the types of surveillance pricing products and services available, methods of data collection, customer and sales data, and the influence of these practices on the prices consumers encounter.