The Federal Trade Commission (FTC) has initiated an investigation into several large companies regarding their use of customer data, algorithms, and artificial intelligence to implement personalized pricing strategies.
The FTC has issued information requests to eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking insights into how these practices affect privacy, competition, and consumer protection.
These companies utilize advanced data tools and techniques known as “surveillance pricing” or “dynamic pricing,” which allow them to present varying prices for the same products based on consumers’ attributes or behaviors. Factors influencing these targeted prices may include a consumer’s location, demographics, credit history, and their online shopping habits.
Several of the firms involved in the FTC’s inquiry provide critical transaction and pricing services to major businesses both in the United States and around the world. Task Software is known for its role in transaction management for leading hospitality brands such as McDonald’s and Starbucks. Revionics specializes in retail price optimization tools for high-profile retailers like Home Depot. Pros, which offers AI-driven pricing solutions, works with clients including Nestlé, HP, and United Airlines, and is also a partner of Microsoft in technology development.
The FTC aims to uncover the complexities of this “opaque market,” where businesses categorize shoppers and assign them targeted prices.
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 seeking information related to four primary areas: the various surveillance pricing products and services offered by each company, their methods of data collection, relevant customer and sales data, and the effects of these practices on consumer pricing.