The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their utilization of customer data, algorithms, and artificial intelligence to personalize pricing strategies.
Eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have been issued orders from the FTC to provide information about how these pricing tactics affect privacy, competition, and consumer protection.
Through advanced data tools like AI, companies are engaging in a practice known as “surveillance pricing” or “dynamic pricing,” which allows them to present varying prices for identical products based on consumers’ specific characteristics and behaviors. Factors influencing these prices can include location, demographics, credit history, and browsing or shopping patterns.
Many of the investigated firms offer transaction, sales, and pricing services to leading corporations in the U.S. and worldwide. Task Software manages transactions for major hospitality brands such as McDonald’s and Starbucks, while Revionics supplies retail price optimization software to stores like Home Depot. Pros, known for its AI-driven pricing solutions, serves clients including Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC aims to uncover the intricacies of this “opaque market,” which sorts consumers into categories and applies targeted pricing.
“Companies that collect personal data from Americans may compromise their privacy. Now, these firms could be using this extensive personal information to inflate prices,” said FTC Chair Lina Khan. “Americans have the right to understand whether businesses are employing detailed consumer data for surveillance pricing, and the FTC’s investigation will bring clarity to this murky landscape of pricing intermediaries.”
The FTC is gathering information on four main aspects: the specific surveillance pricing products and services each company provides, their data collection methods, customer and sales data, and the impact of these surveillance practices on the final prices customers pay.