The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their practices of using customer data, algorithms, and artificial intelligence to customize pricing for individual consumers.
The companies under scrutiny include Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC issued orders on Tuesday requesting information about how these pricing strategies affect privacy, competition, and consumer protection.
These companies utilize data-driven tools, including artificial intelligence, in a practice referred to as “surveillance pricing” or “dynamic pricing.” This method allows them to present varied prices for the same products based on factors such as location, demographics, credit history, and browsing or shopping habits.
Many of the firms being investigated provide transaction, sales, and pricing solutions to some of the largest companies in the United States and worldwide. Task Software manages transactions for notable hospitality brands like McDonald’s and Starbucks, while Revionics specializes in retail price optimization software for major retailers, including Home Depot. Pros, known for its AI-driven pricing solutions, serves clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC’s inquiry aims to clarify the complexities within this “opaque market” that identifies consumers and sets targeted prices for goods and services.
“Companies that collect personal data from Americans risk compromising their privacy. Now these companies may be leveraging this extensive personal information to charge higher prices,” stated FTC Chair Lina Khan. “Consumers have the right to know if businesses are utilizing detailed data to implement surveillance pricing, and the FTC’s investigation will provide insight into this obscure system of pricing intermediaries.”
The FTC is seeking information in four main areas: the types of surveillance pricing offerings from each company, data collection methods, customer and sales data, and how these surveillance techniques affect the final prices customers pay.