The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence in personalized pricing strategies.
The FTC has issued orders to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking information on how these practices affect privacy, competition, and consumer protection.
These companies utilize data tools in a method referred to as “surveillance pricing” or “dynamic pricing,” where varying prices are presented to consumers for identical products based on factors such as location, demographics, credit history, and online behavior.
Many of the targeted companies provide essential transaction, sales, and pricing services for some of the largest enterprises in the United States and across the globe. For instance, Task Software facilitates transaction management for major hospitality chains like McDonald’s and Starbucks, while Revionics offers retail price optimization and analytics to global brands such as Home Depot. Pros, which claims to deliver AI-driven pricing solutions, has notable clients including Nestlé, HP, and United Airlines, and collaborates with Microsoft in technology development.
The FTC’s goal is to investigate this “opaque market” that categorizes shoppers and assigns tailored prices for goods and services.
FTC Chair Lina Khan commented, “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 commission is seeking insights in four main areas: the types of surveillance pricing services offered, data collection methods, customer and sales information, and the influence of these practices on the prices customers ultimately pay.