The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to customize pricing for individuals.
Eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have been asked to provide information that assesses the implications of these pricing strategies on privacy, competition, and consumer protection.
These companies leverage data tools, termed “surveillance pricing” or “dynamic pricing,” to present varying prices for the same products based on individual consumer characteristics or behaviors, such as their location, demographics, credit history, and online shopping habits.
The firms contacted by the FTC are significant players in transaction, sales, and pricing services, working with some of the largest corporations both in the U.S. and internationally. For instance, Task Software is behind transaction management for major hospitality brands like McDonald’s and Starbucks, while Revionics offers pricing optimization software to global chains such as Home Depot. Pros is a software provider known for its AI-driven pricing solutions, serving clients like Nestlé, HP, and United Airlines, and has partnerships with Microsoft.
The FTC aims to uncover details about the “opaque market” that enables categorization of consumers and setting of targeted prices for various products and services.
According to FTC Chair Lina Khan, “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 FTC’s investigation will focus on four main areas: the kinds of surveillance pricing products and services offered by each company, methods of data collection, customer and sales information, and the influence of these practices on the pricing customers ultimately pay.