The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to customize pricing. The inquiry involves eight companies from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. These firms have received requests for information aimed at understanding the implications of their pricing strategies on privacy, competition, and consumer protection.
The practice in question, known as “surveillance pricing” or “dynamic pricing,” involves companies using data tools, including AI, to present different prices to consumers based on various factors such as location, demographics, credit history, and online behavior.
Many of the contacted companies provide transaction, sales, and pricing services to major U.S. and international firms. Task Software is known for its transaction management services for large hospitality brands like McDonald’s and Starbucks. Revionics specializes in retail price optimization software and analytics for global chains, including Home Depot. Pros, which markets itself as an AI-based pricing solutions provider, works with well-known clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC aims to investigate the “opaque market” that categorizes consumers and assigns targeted prices for products and services. FTC Chair Lina Khan emphasized the potential risks to consumer privacy, 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.” The inquiry is expected to increase transparency regarding the use of detailed consumer data in surveillance pricing practices.
The FTC is focusing on four main areas during its investigation: the types of surveillance pricing products and services offered by these companies; their methods of data collection; customer and sales data; and how these surveillance techniques affect the prices consumers ultimately pay.