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.
The inquiry involved eight firms from various sectors: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. On Tuesday, the FTC issued orders to these companies, seeking insights into how these pricing practices affect privacy, competition, and consumer protection.
These companies utilize data-driven tools, often referred to as “surveillance pricing” or “dynamic pricing,” which adjust prices for the same products based on individual consumer characteristics such as location, demographics, credit history, and online shopping behavior.
Many of these firms provide transactional, sales, and pricing solutions for some of the largest organizations in the United States and worldwide. Task Software manages transactions for major hospitality chains, including McDonald’s and Starbucks. Revionics offers retail price optimization software and pricing analytics to notable retailers like Home Depot. Pros, which markets itself as an AI-driven pricing solutions provider, has clients that include Nestlé, HP, and United Airlines, and it collaborates with Microsoft on technology development.
The FTC aims to investigate this “opaque market” that categorizes consumers and assigns targeted prices for various products 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 FTC’s investigation focuses on four main areas: the types of surveillance pricing solutions provided by each company, their data collection methods, sales and customer information, and the effects of these surveillance practices on consumer pricing.