The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their methods of utilizing customer data, algorithms, and artificial intelligence to set individualized pricing.
On Tuesday, the FTC issued orders to eight firms, 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.
Employing advanced data tools, companies have adopted a strategy known as “surveillance pricing” or “dynamic pricing,” where different prices are offered to consumers for identical products based on various factors, including location, demographics, credit history, and online shopping behavior.
Many of the companies under investigation are major providers of transaction, sales, and pricing services to some of the largest corporations in the United States and worldwide. Task Software is the transaction management firm behind significant hospitality brands like McDonald’s and Starbucks, while Revionics delivers retail price optimization software to several international chains, such as Home Depot. Pros, which markets itself as an AI-driven pricing solutions provider, serves well-known clients like Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC aims to investigate the “opaque market” that sorts consumers and applies targeted pricing strategies.
“Companies collecting Americans’ personal data jeopardize their privacy. They may also exploit this wealth of information to impose higher charges on consumers,” stated FTC Chair Lina Khan. “Americans have the right to understand if businesses are leveraging extensive consumer data for surveillance pricing, and the FTC’s investigation will clarify this obscure network of pricing intermediaries.”
The FTC’s inquiry will focus on four primary areas: the types of surveillance pricing products offered by each company, data collection methods, customer and sales information, and the impact of these surveillance practices on the pricing customers ultimately pay.