The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence to set individualized pricing.
On Tuesday, the FTC issued orders to eight firms: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The regulatory body is seeking information about how these pricing practices affect privacy, competition, and consumer protection.
These companies utilize data tools, including AI, to implement “surveillance pricing” or “dynamic pricing,” which allows them to display different prices for the same product depending on various factors such as location, demographics, credit history, and online shopping behavior.
Many of the targeted companies supply transaction, sales, and pricing services to some of the largest businesses in the U.S. and worldwide. Task Software handles transaction management for major hospitality chains like McDonald’s and Starbucks, while Revionics specializes in retail price optimization and analytics for global brands like Home Depot. Pros, known for its AI-driven pricing solutions, counts Nestlé, HP, and United Airlines as clients and collaborates with Microsoft on technology development.
The FTC aims to investigate this “opaque market” where shoppers are categorized and charged targeted prices for products 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 commission is focusing on four key areas: the types of surveillance pricing products and services offered by each company, methods of data collection, customer and sales information, and the impact of these surveillance practices on pricing for customers.