The Federal Trade Commission (FTC) has initiated an investigation into several leading companies regarding their use of customer data, algorithms, and artificial intelligence to personalize pricing strategies.
On Tuesday, the FTC issued orders to eight firms—Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros—demanding information about the implications of these pricing methods on privacy, competition, and consumer protection.
These companies utilize data-driven techniques like “surveillance pricing,” also known as “dynamic pricing,” which allows them to display varying prices for the same products based on individual consumer traits, such as location, demographics, credit history, and online behavior.
Many of the firms under scrutiny have significant roles in assisting major U.S. and international businesses with transaction, sales, and pricing services. For instance, Task Software supports prominent hospitality brands like McDonald’s and Starbucks, while Revionics offers retail pricing optimization tools to major chains like Home Depot. Additionally, Pros, which specializes in AI-driven pricing solutions, serves clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft as a tech partner.
The FTC aims to clarify the complexities of what it describes as an “opaque market” that categorizes consumers to set personalized prices for goods and services.
“Companies that collect personal data from Americans risk compromising privacy. Now, these firms might exploit this wealth of personal information to charge higher prices,” stated FTC Chair Lina Khan. “Americans have the right to understand if businesses utilize extensive consumer data for surveillance pricing, and this inquiry will illuminate the murky landscape of pricing intermediaries.”
The FTC is specifically seeking information in four critical areas: the specific surveillance pricing products and services offered by each company, their data collection methods, customer and sales data, and the ways these practices affect the pricing that customers eventually face.