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.
The investigation targets eight firms from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC issued orders to these companies, seeking insights into the implications of their pricing practices on privacy, competition, and consumer protection.
These companies utilize data-driven tools, known as “surveillance pricing” or “dynamic pricing,” enabling them to offer different prices for the same products based on customer attributes and behavior. Factors influencing these prices can include location, demographic information, credit history, and online shopping patterns.
Many of the firms scrutinized by the FTC play a significant role in providing transaction, sales, and pricing services to major U.S. and international companies. For example, Task Software is linked to major hospitality brands like McDonald’s and Starbucks, while Revionics delivers retail price optimization software to well-known chains, including Home Depot. Pros is recognized for its AI-driven pricing solutions and counts Nestlé, HP, and United Airlines among its clients, along with a technology partnership with Microsoft.
The FTC aims to investigate the “opaque market” that distinguishes shoppers and adjusts prices accordingly for various products and services.
According to FTC Chair Lina Khan, “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 agency is focusing on four primary areas: the types of surveillance pricing products and services offered by each company, their data collection methods, the customer and sales information involved, and the influence of these practices on the final prices consumers pay.