The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to personalize pricing strategies.
Eight firms from various industries, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Company, Revionics, Bloomreach, and Pros, received notifications from the FTC on Tuesday, requesting details on how these pricing mechanisms affect privacy, competition, and consumer protection.
These companies utilize data-driven tools, such as artificial intelligence, to implement a practice known as “surveillance pricing,” or “dynamic pricing.” This method allows them to present different prices to consumers for the same products based on various factors, including location, demographics, credit history, and past browsing or shopping behaviors.
Many of the firms targeted by the FTC play significant roles in providing transaction, sales, and pricing services to major corporations both domestically and internationally. For instance, Task Software manages transactions for notable hospitality brands such as McDonald’s and Starbucks. Revionics offers retail price optimization software and analytics to major retailers, including Home Depot. Pros claims to provide AI-driven pricing solutions and serves clients like Nestlé, HP, and United Airlines, in addition to being a technology partner of Microsoft.
The FTC is investigating the complexities of what it describes as an “opaque market,” which entails categorizing consumers to establish targeted prices for goods and services.
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 seeking information on four main aspects: the types of surveillance pricing products and services offered by each company, data collection methods, sales and customer data, and how these practices impact the pricing that consumers ultimately encounter.