The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence to customize pricing for individuals.
The firms under scrutiny include Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC issued orders to these companies on Tuesday, seeking information about how their pricing practices may affect consumer privacy, competition, and protection.
Employing tools such as artificial intelligence, these companies have adopted a practice known as “surveillance pricing” or “dynamic pricing,” which allows them to offer different prices to consumers for identical products based on various factors such as location, demographics, credit history, and individual browsing or shopping habits.
Many of the companies that have been contacted by the FTC are significant providers of transaction, sales, and pricing services, working with some of the largest brands in the United States and worldwide. Task, for example, manages transactions for major hospitality chains like McDonald’s and Starbucks. Revionics offers retail price optimization software and pricing analytics to global stores, including Home Depot. The software company Pros, known for its AI-driven pricing solutions, has clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC aims to clarify the complexities of this “opaque market” that categorizes consumers and sets targeted prices for goods 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’s investigation seeks to gather information in four main areas: the types of surveillance pricing products and services offered by each company, data collection methods, customer and sales information, and the influence of these surveillance practices on pricing.