The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to implement personalized pricing strategies.
Eight companies from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have been ordered by the FTC to provide information on the ramifications of these pricing practices on privacy, competition, and consumer protection.
These companies utilize advanced data tools, including AI, to engage in a practice frequently referred to as “surveillance pricing” or “dynamic pricing.” This approach allows businesses to offer different prices for identical products based on consumer attributes such as location, demographics, credit history, and online shopping habits.
Many of the firms questioned by the FTC play a significant role in providing transaction, sales, and pricing solutions to some of the largest companies in the United States and worldwide. Task, for example, manages transactions for major hospitality brands like McDonald’s and Starbucks. Revionics specializes in retail price optimization software for global retailers, including Home Depot. Pros, which markets itself as an AI-driven pricing software provider, boasts clients such as Nestlé, HP, and United Airlines, and partners with Microsoft for technology development.
The FTC aims to investigate this opaque market that categorizes consumers and sets specific prices for products and services based on collected data.
FTC Chair Lina Khan stated, “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 seeking information in four primary areas: the types of surveillance pricing products and services offered by each company, the methods of data collection, customer and sales data, and how these surveillance practices affect consumer pricing.