The Federal Trade Commission (FTC) has initiated an investigation involving several prominent companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
The inquiry includes eight companies from various sectors: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. These firms have been ordered by the FTC to provide information concerning the implications of their pricing practices on privacy, competition, and consumer protection.
Companies utilize data analytics tools, notably artificial intelligence, in a method known as “surveillance pricing” or “dynamic pricing.” This approach allows businesses to present different prices to consumers for the same product based on individual characteristics and behaviors, which may include factors such as geographical location, demographics, credit history, and browsing or shopping habits.
Many of the companies under investigation offer transaction, sales, and pricing solutions to several major corporations both in the United States and worldwide. For instance, Task Software plays a vital role in transaction management for leading hospitality brands like McDonald’s and Starbucks. Revionics supplies retail price optimization software to major retail chains, including Home Depot. Pros, which markets itself as a provider of AI-driven pricing solutions, counts major corporations like Nestlé, HP, and United Airlines as clients and collaborates with Microsoft on technology development.
The FTC aims to clarify the complexities of this “opaque market” where profiling of shoppers occurs to set targeted pricing for various products and services.
According to FTC Chair Lina Khan, “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 details in four main areas: the types of surveillance pricing products and services offered by each company, methods of data collection, information on customers and sales, and the impact of these pricing practices on the final prices consumers pay.