The Federal Trade Commission (FTC) has initiated an investigation involving several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to customize pricing strategies.
Eight firms have been targeted by the FTC, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency is seeking detailed information about how these practices impact privacy, competition, and consumer protection.
The companies utilize data-driven strategies referred to as “surveillance pricing” or “dynamic pricing,” which allow them to present different prices for the same products based on consumer characteristics and behaviors. Factors influencing these prices can include location, demographic information, credit history, and online shopping habits.
Many of the firms involved provide transaction, sales, and pricing services to major corporations both in the U.S. and worldwide. Task Software manages transactions for several leading hospitality brands, such as McDonald’s and Starbucks. Revionics offers pricing optimization software and analytics for retail giants, including Home Depot. Pros, which promotes itself as an AI-driven pricing solution provider, counts Nestlé, HP, and United Airlines among its clientele and partners with Microsoft in technology development.
The FTC aims to investigate the “opaque market” where consumer categorization leads to targeted pricing for various products and services. FTC Chair Lina Khan emphasized the need for transparency, stating, “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 investigation will focus on four main areas: the types of surveillance pricing products and services offered by each company, how data is being collected, customer and sales information, and the effects of these surveillance practices on the prices consumers pay.