The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence (AI) for personalized pricing strategies.
Eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have been issued orders by the FTC for information on how these pricing practices impact privacy, competition, and consumer protection.
These companies utilize data tools in a method referred to as “surveillance pricing” or “dynamic pricing,” which allows them to display varying prices for the same products based on specific consumer characteristics or behaviors. Factors can include location, demographics, credit history, and online browsing or shopping habits.
Many of the targeted companies supply transaction, sales, and pricing services to some of the largest businesses in the United States and globally. Task Software is linked with various major hospitality brands, including McDonald’s and Starbucks. Revionics offers retail price optimization tools and analytics to significant retailers like Home Depot. Pros, which promotes itself as an AI-driven pricing solutions provider, works with clients such as Nestlé, HP, and United Airlines and collaborates with Microsoft on technology development.
The FTC aims to clarify this “opaque market,” which categorizes consumers and sets targeted prices for goods and services. FTC Chair Lina Khan highlighted 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. 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 focusing on four primary areas for information: the types of surveillance pricing products and services provided by each company, data collection methods, customer and sales information, and the influence of these pricing strategies on the final prices consumers pay.