The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing.
The FTC has issued orders to eight firms: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. These companies have been asked to provide information on how their pricing strategies affect privacy, competition, and consumer protection.
These firms utilize various data tools to implement what is referred to as “surveillance pricing” or “dynamic pricing,” which allows them to charge different prices for the same products based on individual consumer characteristics or behaviors. Factors influencing these prices can include customers’ location, demographics, credit history, and their online shopping habits.
Many of the companies under scrutiny play significant roles in providing transaction, sales, and pricing services to leading corporations both in the U.S. and internationally. For instance, Task Software is known for managing transactions for major hospitality brands, including McDonald’s and Starbucks. Revionics specializes in retail price optimization, serving clients like Home Depot, while Pros offers AI-driven pricing solutions to companies such as Nestlé, HP, and United Airlines, and has a technology partnership with Microsoft.
The FTC aims to clarify this “opaque market” where consumers are categorized, allowing for targeted pricing of goods and services. FTC Chair Lina Khan emphasized the potential risks to consumer privacy, stating that companies could be misusing personal data to impose higher prices. The inquiry seeks to illuminate the practices of businesses using detailed consumer information for surveillance pricing.
The investigation will focus on four primary areas: the nature of the surveillance pricing products and services offered, data collection methods, customer and sales information, and the impact of these practices on the final prices consumers pay.