The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their practices involving customer data, algorithms, and artificial intelligence used to customize pricing for individual consumers.
On Tuesday, the FTC issued orders to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, requesting details about the implications of these pricing strategies on privacy, competition, and consumer protection.
Using tools such as AI, these companies engage in what is known as “surveillance pricing” or “dynamic pricing,” which allows them to display varying prices for identical products depending on consumer attributes like location, demographics, credit history, and past shopping behavior.
Many of the targeted firms provide transaction, sales, and pricing services to leading businesses both in the U.S. and around the world. For instance, Task Software manages transactions for major hospitality brands including McDonald’s and Starbucks, while Revionics specializes in retail price optimization for global chains such as Home Depot. Pros, known for its AI-driven pricing solutions, serves clients like Nestlé, HP, and United Airlines, and partners with Microsoft for technology development.
The FTC aims to clarify the complexities of this “opaque market” that segments shoppers and establishes specific pricing for various goods and services.
“Firms that collect personal data from Americans risk compromising their privacy. Companies may be leveraging this extensive pool of personal data to charge higher prices,” stated FTC Chair Lina Khan. “Americans have the right to understand whether businesses are utilizing comprehensive consumer data for surveillance pricing, and the FTC’s investigation will illuminate this obscure world of pricing intermediaries.”
The FTC is concentrating on four main areas: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales information, and the impact of these surveillance practices on customer pricing.