The Federal Trade Commission (FTC) has initiated an investigation into several large companies regarding their use of customer data, algorithms, and artificial intelligence to set individualized pricing.
A total of eight firms—Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros—received orders from the FTC on Tuesday to provide information about how these pricing methods affect privacy, competition, and consumer protection.
These companies employ data-driven techniques, often referred to as “surveillance pricing” or “dynamic pricing,” which allow them to present different prices for the same products based on various consumer characteristics, such as location, demographics, credit history, and online shopping behavior.
Many of the firms under scrutiny offer transaction, sales, and pricing services to some of the largest businesses in the U.S. and worldwide. Task Software is notably involved with several major hospitality brands, including McDonald’s and Starbucks. Revionics provides pricing optimization tools to retail chains like Home Depot, while Pros, which specializes in AI-powered pricing solutions, works with clients including Nestlé, HP, and United Airlines. Pros is also a technology partner of Microsoft.
The FTC aims to clarify the complexities of an “opaque market” that segments shoppers and assigns them specific prices for various products and services.
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 in four main areas: the types of surveillance pricing products offered by each company, their data collection methods, customer and sales data, and how these practices impact the prices consumers ultimately face.