The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
On Tuesday, the FTC issued information requests to eight firms across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency aims to understand the implications of these pricing methods on privacy, competition, and consumer protection.
These companies utilize data-driven tools, commonly referred to as “surveillance pricing” or “dynamic pricing,” to present varying prices to different consumers for the same products based on individual characteristics and behaviors. Factors influencing this pricing can include consumer location, demographics, credit history, and online shopping history.
Many of the contacted firms provide critical transaction, sales, and pricing services to some of the largest companies in the United States and around the globe. For instance, Task Software manages transactions for major hospitality businesses like McDonald’s and Starbucks, while Revionics offers retail price optimization technology to numerous global chains, including Home Depot. Pros, a software provider known for its AI-driven pricing solutions, counts leading brands such as Nestlé, HP, and United Airlines among its clients and collaborates with Microsoft on technology development.
The FTC aims to clarify the workings of this “opaque market,” which segments consumers and establishes targeted pricing for various products and services. FTC Chair Lina Khan remarked, “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 is particularly interested in four main areas: the specific types of surveillance pricing products and services offered by each company; methods of data collection; customer and sales information; and the influence of these surveillance practices on the final prices paid by consumers.