The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
On Tuesday, the FTC issued orders to eight companies — Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros — seeking information on how their pricing practices impact privacy, competition, and consumer protection.
Companies utilize data tools, such as AI, in a method referred to as “surveillance pricing” or “dynamic pricing,” which allows them to present varying prices for the same products based on factors like location, demographics, credit history, and browsing or shopping habits.
Many of the firms approached by the FTC supply transaction, sales, and pricing services to some of the largest businesses in the United States and worldwide. For example, Task Software manages transactions for major hospitality brands like McDonald’s and Starbucks. Revionics provides retail price optimization and analytics to several global retailers, including Home Depot. Pros markets itself as an AI-driven pricing solution provider and has clients such as Nestlé, HP, and United Airlines, and it partners with Microsoft for technology development.
The FTC aims to investigate this “opaque market,” which categorizes consumers and assigns targeted prices for goods and services. FTC Chair Lina Khan remarked, “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 details in four main areas: the types of surveillance pricing products and services offered, data collection methods, customer and sales information, and the influence of these practices on the pricing customers ultimately pay.