The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to personalize pricing strategies.
The companies under scrutiny include Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. On Tuesday, the FTC issued orders for information about how these pricing practices affect privacy, competition, and consumer protection.
These businesses utilize tools such as AI in a practice referred to as “surveillance pricing” or “dynamic pricing,” which allows for different pricing of the same products based on various consumer attributes like location, demographics, credit history, and online behavior.
Many of the companies being investigated offer transaction, sales, and pricing services to some of the largest firms both in the U.S. and internationally. Task Software manages transactions for major hospitality brands including McDonald’s and Starbucks. Revionics specializes in retail price optimization, servicing global chains like Home Depot, while Pros, which provides AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clients and is a technology partner of Microsoft.
The FTC aims to clarify the complexities involved in this “opaque market,” where consumers are categorized and subjected to targeted pricing for 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 FTC is seeking information in four main areas: the types of surveillance pricing products and services each company provides, their data collection methods, customer and sales data, and how these practices influence the final prices that consumers pay.