The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their utilization of customer data, algorithms, and artificial intelligence to implement individualized pricing strategies.
Eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, were ordered by the regulatory agency to provide insights into the effects of these pricing methods on privacy, competition, and consumer protection.
These companies engage in a practice known as “surveillance pricing” or “dynamic pricing,” where they present varying prices to consumers for identical products based on factors such as location, demographics, credit history, and browsing or shopping behaviors.
The companies under scrutiny by the FTC predominantly offer transaction, sales, and pricing services to major corporations within the U.S. and internationally. Task Software is known for managing transactions for notable hospitality brands like McDonald’s and Starbucks. Revionics specializes in retail price optimization software and analytics for prominent chains, including Home Depot. Pros, which claims to provide AI-driven pricing solutions, has a client list that includes Nestlé, HP, and United Airlines, and it collaborates with Microsoft as a technology development partner.
The FTC aims to clarify the complexities of this “opaque market” that profiles consumers and establishes targeted pricing for various goods and services.
“Companies that collect Americans’ personal information can jeopardize their privacy. It appears that these firms may be taking advantage of extensive personal data to impose higher prices,” stated FTC Chair Lina Khan. “Americans have the right to know if businesses are leveraging detailed consumer data for surveillance pricing, and the FTC’s investigation will bring transparency to this concealed pricing landscape.”
The FTC is seeking information on four primary areas: the types of surveillance pricing products and services offered by each company, data collection methods, customer and sales data, and the influence of these surveillance practices on the final prices paid by consumers.