The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies concerning their use of customer data, algorithms, and artificial intelligence in personalized pricing strategies.
On Tuesday, the agency issued orders to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, requesting information on how these pricing practices affect privacy, competition, and consumer protection.
These companies utilize data analysis tools, such as artificial intelligence, to implement a pricing strategy known as “surveillance pricing” or “dynamic pricing,” which allows them to present different prices for the same products based on customer attributes such as location, demographics, credit history, and online behavior.
Many of the firms targeted by the FTC offer transaction, sales, and pricing services to some of the largest companies in the United States and around the world. Task Software manages transactions for major hospitality brands like McDonald’s and Starbucks. Revionics delivers retail price optimization technology to global chains, including Home Depot. Pros, which promotes its AI-driven pricing solutions, serves clients like Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC aims to explore this “opaque market” where consumer data is used to classify shoppers and establish targeted pricing.
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 agency is seeking insights in four primary areas: the types of surveillance pricing solutions offered by each company, their data collection methods, customer and sales information, and the impact of these practices on consumer pricing.