The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
Eight companies from various sectors — Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros — were issued information requests on Tuesday. The FTC aims to examine the implications of these pricing practices on privacy, competition, and consumer welfare.
These companies engage in what is known as “surveillance pricing” or “dynamic pricing,” which involves displaying varied prices to consumers for identical products based on their individual characteristics or behaviors. Factors influencing pricing can include location, demographics, credit scores, and online shopping habits.
Many of the firms under scrutiny provide transaction, sales, and pricing services to major U.S. and international brands. Task, for instance, manages transactions for notable hospitality businesses such as McDonald’s and Starbucks. Revionics specializes in retail price optimization for chains like Home Depot. Pros markets itself as an AI-driven pricing solution provider and counts Nestlé, HP, and United Airlines as clients, while also partnering with Microsoft for technology development.
The FTC seeks to clarify the complexities surrounding this market, which segments consumers and applies tailored pricing to goods and services.
According to FTC Chair Lina Khan, “Companies that collect personal data from Americans risk compromising their privacy. Now, these companies could be misusing this extensive personal information to impose higher prices.” Khan emphasized the necessity for transparency regarding whether businesses utilize detailed consumer data for surveillance pricing, stating that the FTC’s investigation aims to illuminate this obscure realm of pricing intermediaries.
The FTC’s inquiry will focus on four primary areas: the specific types of surveillance pricing products and services provided by each company; methods of data collection; customer and sales information; and the influence of these surveillance practices on consumer pricing.